Audi, the German automotive manufacturer and a subsidiary of Volkswagen, has announced plans to reduce its workforce by 7,500 positions in Germany by 2029. This decision is part of a broader cost-cutting strategy aimed at achieving annual savings of over one billion euros.

The agreement reached between Audi and the works council underscores a commitment to avoiding any layoffs due to operational reasons until at least the end of 2033.

This announcement comes as Audi faces significant challenges in the evolving automotive market, particularly amid a downturn impacting the entire German automobile sector.

The plan was negotiated after extensive discussions, initially suggesting a potential reduction of up to 12,000 jobs.

However, the final agreement is structured to limit the impact primarily to indirect roles, focusing on administrative efficiencies while preserving production jobs.

Audi's CEO, Gernot Döllner, noted the necessity for the company to become more agile and efficient, emphasizing that personnel adjustments are vital for future competitiveness.

In tandem with the planned job cuts, Audi has committed to investing approximately eight billion euros into its operations in Germany to facilitate a smoother transition to electric vehicle production.

The agreement allows for a revised employment guarantee extending existing protections against layoffs.

The layoffs will commence with 6,000 positions to be eliminated by 2027, followed by an additional 1,500 by the end of 2029. The specific distribution of job losses between Audi's facilities in Ingolstadt and Neckarsulm has not yet been determined.

Employees will also face changes to profit-sharing structures, which are expected to decrease due to disappointing financial performance linked to supply chain issues and reduced demand, particularly in the Chinese market.

In a significant operational shift, Audi plans to bring the production of its Q3 model back to Ingolstadt, moving it from its current manufacturing base in Hungary.

This strategy includes an insourcing initiative aimed at reintegrating approximately 1,000 jobs by redistributing functions that were previously outsourced back within the company.

The IG Metall labor union has announced that its members will receive an additional bonus starting in 2026, recognizing their solidarity during this transition period.

Union representatives have expressed their commitment to safeguarding jobs and collective bargaining rights while navigating the current challenges within the automotive landscape.

Throughout these negotiations, the stakeholders involved have worked diligently to ensure that essential wage components and pending salary increases are maintained despite the impending job cuts, reflecting the collaborative nature of these discussions.

Audi's ongoing efforts are seen as critical for maintaining not only its operational viability but also for preserving employment in Germany's automotive industry.