Bram Schot sees "a little fat here and there" at Audi
Audi's profit collapsed in 2018. Now the automaker wants to save harder than previously announced. According to a newspaper report, up to 15 percent of jobs are to be cut.
Audi CEO Bram Schot wants to make his company more profitable with a tough austerity program and job cuts. According to Schot, the VW subsidiary wants to save a total of 15 billion euros by 2022 instead of the previously announced 10 billion in order to be able to handle the high investments in electric mobility. There was "a little fat here and there," said Schot at the presentation of the year figures. "But we have to build muscle."
The Audi management did not want to give any information on the extent of planned job cuts. However, the "Handelsblatt" reports, citing corporate insiders, that management is negotiating with the works council for the reduction of jobs worldwide by up to 15 percent.
The restructuring of the company "will not be comfortable, but we set the profit zone clear before the comfort zone," said CFO Alexander Seitz. Schot had already said last December, 90,000 Audi employees were too much.
For the 61,000 Audi employees in the parent plant Ingolstadt and in Neckarsulm in the Federal Republic of Germany until 2025 a protection against dismissal applies. Seitz said, "When colleagues retire, we put the replacement needs to the test."
Profit slumped by 24 percent
Last year, Audi had sold only 1.8 million cars because of problems with the conversion to the new exhaust gas standard WLTP, falling far behind Mercedes and BMW. Sales fell to 59.2 billion euros, operating profit plummeted by 24 percent to 3.53 billion euros.
Schot said: "We are not satisfied with these numbers." Only the diesel retrofits and the fine imposed by the Munich Justice for manipulation of exhaust fumes struck with 1.2 billion euros to book.
In addition to the WLTP problems, the Group is burdened by high start-up costs for new models, the more difficult economic situation and high investments in electric cars. From 2023, Audi wants to offer twelve, from 2025 to around 30 hybrid and all-electric cars.
Schot wants to thin out management and redistribute tasks
To become more profitable, Schot wants to delete jobs, thin out middle management and scrutinize shifts, allowances, model and engine variants. In addition, the tasks between the plants will be redistributed and joint platforms with VW and Porsche will be used more extensively. Sales and sales are expected to rise only slightly in 2019.
Also damages claims of Audi diesel buyers as well as a possible antitrust penalty of the EU because of collusion with other manufacturers could burden the VW subsidiary yet. The prosecutor Munich continues to investigate not only against Schots predecessor Rupert Stadler, but also against a reigning Audi board.
After Stadler's arrest last June, Schot took over Audi's management and is now drastically expanding its savings and electrification plans. This Audi is in line with the VW Group, which also cuts jobs at its core brand VW and invested heavily in e-cars.
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