German Carmaker Audi to Slash 9,500 Jobs by 2025

November 27, 2019

Audi AG, a subsidiary of Volkswagen (VW), is a German automobile manufacturer that designs, engineers, produces, markets and distributes luxury vehicles, said Tuesday it planned to slash 9,500 jobs in Germany by 2025 as part of a massive overhaul to help finance an expensive move to electric vehicles.

Audi said the cuts would not happen in the form of firings, but rather based on demographic criteria, such as regular rotation of the workforce. It will also offer lucrative early retirement schemes to encourage older workers to take early leave. The automaker said it would mitigate the blow to workers by creating some 2,000 new jobs in the electromobility and digitization sectors.

This operation is part of a broader restructuring, known as the “Future Pact”, negotiated between management and the company’s works council. The company will also extend work guarantees to existing employees from 2025 to 2029.

The shake-up comes as Audi, like other carmakers, grapples with slowing demand in a weaker global economy, tougher pollution rules and the huge investments needed for the battery-powered era.

“In times of upheaval, we are making Audi more agile and more efficient, This will increase productivity and sustainably strengthen the competitiveness of our German plants,” said CEO Bram Schot.

The remaining roughly 50,000 workers at Audi’s Ingolstadt and Neckarsulm factories will have job security until the end of 2029 under the hard-fought deal struck with labor representatives.

“We have reached an important milestone, The extension of the employment guarantee is a great success in difficult times,” said Peter Mosch, head of Audi’s works council.

According to Audi, the reorganization would increase profits by 6 billion euros by 2029, allowing the high-end brand to reach a profit margin of 9 to 11%

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