Audi scraps 7,500 jobs in Germany in cost-cutting strategy

The crisis at Audi deepens. Just weeks after the full closure of its Brussels plant, the luxury carmaker announced that it will slash 7,500 jobs in Germany by 2029 as part of a broad cost-cutting strategy. The Volkswagen-owned luxury automaker announced the move after lengthy negotiations with the company’s works council.

The job cuts, which amount to 13.5% of Audi’s German workforce, are part of a plan to generate more than €1 billion in annual savings. Initially, Audi sought to cut 12,000 positions, but the works council secured a compromise that limits the reductions and extends job protections.

“We were able to prevent even deeper cuts while securing Audi’s future as a major employer in Germany,” works council chairman Jörg Schlagbauer said.

Voluntary redundancies

Audi CEO Gernot Döllner affirmed that his company needs to become “faster, more agile, and more efficient” in the face of tightening economic conditions, growing competition, and geopolitical uncertainty. “One thing is clear: this won’t be possible without workforce adjustments,” he said.

However, the company pledged that no employees would be forced out, with the job cuts instead coming through voluntary redundancies, retirements, and attrition.

Audi also extended its job security program, ensuring no compulsory layoffs until at least 2033. The layoffs will reportedly take place primarily in administration and development. In production, 9,500 worker contracts have already been terminated since 2019. 

Low margins

The restructuring underscores the mounting pressure on Europe’s premium automakers, who are grappling with declining demand, rising costs, and increased competition from Chinese electric vehicle manufacturers.

Audi, which employs 87,000 people globally – more than 60% of them in Germany – has been particularly affected by a downturn in China, supply chain disruptions, and a weaker European market. Its operating margin has shrunk to a meager 4.5%, the lowest of all German luxury carmakers.

In 2024, Audi delivered 164,000 EVs, an 8% drop from the previous year and not even half as much as rival BMW (368,475 units), which is much more successful in offloading sales of its electric models.

Audi’s overall registrations in China, a crucial market for nearly 40% of its global deliveries, fell 11% to 650,000 vehicles. To woo back Chinese customers, Ingolstadt launched the separate AUDI brand at the end of last year, with capital letters but without the four-ringed logo. Generally, the Ingolstadt-based carmaker has also struggled with production challenges.

Gearing up for the new Q3

Despite the job reductions, Audi plans to invest heavily in its two largest German plants – Ingolstadt and Neckarsulm – to position them for the EV transition. The company has earmarked €8 billion for these sites by 2029, focusing on modernizing production lines and integrating new EV models.

“We are positioning Ingolstadt and Neckarsulm to be robust and flexible for the challenging transition to electric mobility,” Döllner said. The Ingolstadt plant is set to begin production of the Q3 SUV, a model considered crucial to Audi’s sales strategy.

While employees will see job reductions, the Works Council emphasized that key worker protections remain in place. Monthly salaries, bonuses, and scheduled wage increases will not be affected.

However, Audi’s employee profit-sharing scheme will be restructured and reduced for several years, though workers will still receive payouts based on 2023 performance.