Audi to downsize its workforce in switch to electrification

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The German auto manufacturer The VolksWagen Group has announced plans to downsize its workforce at its VW and Audi brands in switch to electrification. The layoffs will affect Ingolstadt and Neckarsulm workforces in Germany. Audi has said the downsizing should not be interpreted as firing, but rather as a regular occurrence along demographic lines. It will also offer its workers early retirement packages as an incentive for aged workers to take early leave. Audi plans to release approximately 15% of its German workforce to increase profit by $6.6 billion while Volkswagen, which is AG’s biggest profit maker, proceeds with a restructuring plan to help adapt to the high cost of transitioning to electric cars.

The restructure is aimed at recouping ground lost to luxury cars; Mercedes-Benz and BMW and counter pressure from Tesla. Audi’s profits dipped after the 2015 diesel scandal and Volkswagen has been trying to revive its fortunes. Audi intends to reduce as many as 9,500 jobs in Germany. Audi’s CEO said that the positions will not be cut off through firing but through attrition and voluntary measures including early retirement. Audi intends to retain approximately 50,000 employees and extend their employment guarantees from 2025 to 2029. The brand will also create 2,000 new positions to increase its engineering potency for digital sector and electromobility. This move is a part of a larger restructuring plan known as ‘The Future Pact,’ negotiated between the management and the employees council.

Bram Schot, Audi CEO announced the move and emphasized on the importance of making Audi more efficient and agile even through challenges. The move is aimed at increasing productivity and a more sustainable model that will strengthen to competitiveness of Audi’s German plants. Schot is set to retire in April 2020 as CEO and Markus Duesmann will be the new CEO. Duesmann will be expected to increase the company’s profits, increase collaboration with VW and Porsche, and release 30 new electric vehicles to the market. Other than the Dieselgate scandle that hit audi in 2015, the brand has also suffered losses compared to its German competitors since the introduction of new European emissions standards known as WLTP last year. Audi has over 90,000 workers internationally and 60,000 of the workers are based in Germany.

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