German automaker Audi has announced plans to cut 7500 jobs in Germany by the end of 2029 as part of a comprehensive cost-reduction initiative aimed at saving more than €1 billion (approximately $1.1 billion) annually. The company, a subsidiary of the Volkswagen Group, reached an agreement on the workforce reductions after extensive negotiations with employee representatives.

While initial discussions considered a larger cut of up to 12,000 positions, the finalized plan focuses on eliminating jobs primarily in administrative and non-production/non-union areas. The first 6000 positions will be phased out by 2027, with an additional 1500 reductions by 2029. Audi has pledged that there will be no forced layoffs, with employment guarantees extended until the end of 2033.

Job cuts amid declining sales and cost pressures

The job reductions come as Audi faces declining global sales. In 2024, the company’s worldwide deliveries fell by 12%, with German sales dropping by 21% and Chinese sales declining by 11%. In response, Audi is not only cutting jobs but also reducing employee bonuses. In 2024, the profit-sharing bonus for workers was €8,840 ($9700) per employee, but future payouts are expected to be lower.

“Audi must become faster, more agile, and more efficient,” said CEO Gernot Döllner. “It is clear that personnel adjustments are necessary.”

Investment in electrification, but combustion engines to stay longer

As part of its restructuring, Audi has committed to investing €8 billion ($8.8 billion) in its German operations to strengthen its transition to electric mobility. The company plans to expand electric vehicle production at its Neckarsulm plant, including large electric sedans.

However, in a strategic shift, Audi will continue investing in internal combustion engine production at its Ingolstadt plant beyond 2030. Originally, Audi had planned to stop developing new gasoline and diesel models by 2026 and to cease selling internal combustion engine vehicles completely in Europe by 2033. With electric vehicle adoption progressing slower than anticipated, the company is now reconsidering these timelines, as perhaps is the European Union under pressure from European automakers who say the current targets to eliminate ICE light vehicles are to aggressive.

US sales decline in 2024

In the United States, Audi experienced a significant sales decline in 2024. The company reported total sales of 196,576, a 14% decrease from the 228,550 units sold in 2023. The Q5 model remained Audi's best-seller in the US, with 56,799 units sold, though this represented a 23% drop from the previous year. Conversely, the Q3 model saw a 45% sales increase, totaling 32,090 units. Additionally, Audi's certified pre-owned vehicle sales rose by 29.3% in 2024, indicating a shift among budget-conscious consumers toward premium used vehicles.