Audi to slash 10,000 jobs to cut costs
German automaker Audi is cutting 10,000 jobs in Germany to save cost up to $6.6 BN. The premium carmaker, part of Volkswagen Group, said the cuts would be made over the next six years and come through workforce turnover and enhanced retirement packages.
At the same time as eliminating jobs, Audi said it would create up to 2,000 new positions as it hires people to work on electric vehicles and related digital projects.
The news of Audi cutting jobs comes less than a fortnight after Daimler said it would cut more than 1,000 jobs by the end of 2022.
Earlier this year, another German carmaker Volkswagen announced to cut about 7,000 jobs to by 2023 to lower operating costs by $6.6 BN. It was also revealed that most of the job cuts are expected to be carried out through retirement offers. It was estimated that 11,000 Volkswagen employees would be eligible for retirement in 2019. At the same time, the company plans to add 2,000 jobs in research and development.
The car industry is facing a downturn in key markets, including China, as well as increased costs as it meets more stringent European Union emissions regulations and the costly switch to electric vehicles. Audi saw falling sales, revenues and operating profits in the first nine months of 2019.
It is not just German carmakers that are facing sluggish growth. Car parts suppliers Bosch and Continental have announced thousands of job cuts. German car part supplier, Brose this November announced to cut 2,000 jobs in Germany over the next three years due to a slump in earnings. In September, Last month, German supplier Continental said it would cut jobs and close plants over the next ten years as it faces a slowing global auto sector.
The health of the car industry is critical to Germany’s economic strength. It sustains 820,000 jobs domestically, produced total revenues of 423 BN euros in 2017 and contributes around 5 percent to German GDP. More than 77 percent of the cars produced in Germany are exported. But the industry is in trouble, hurt by trade tensions and the slowdown in China, its biggest market. Passenger vehicle sales there fell four percent to 23 million last year, and sales have continued to decline this year, dropping 14 percent in the first half.