German automaker Audi has reported a significant financial setback, with its net profit plunging by one-third over the past year. The luxury car brand, part of the Volkswagen Group, has been grappling with declining sales across Europe and increased competition from more affordable Chinese vehicles gaining traction in the market.
The company’s revenue dropped nearly 10%, resulting in a net profit of €4.2 billion. To address these challenges, Audi has announced a major restructuring plan aimed at reducing costs. This includes the elimination of 7,500 jobs in Germany by 2029, focusing cuts primarily on administrative and development departments rather than factory positions. The restructuring is expected to generate annual savings of €1 billion.
As part of this overhaul, Audi also revealed plans to close its Brussels plant, where around 3,000 employees are involved in producing electric drive systems. This move reflects a broader shift in the industry, with German automakers feeling the pressure from a declining domestic economy and fierce global competition. China, once a key market for German cars, has seen a shift in consumer preference toward locally manufactured, cost-effective vehicles. This trend, coupled with China’s growing exports of affordable cars to Europe, has significantly impacted the demand for European automobiles.
Volkswagen, Audi’s parent company and Germany’s largest private employer, is also implementing cost-cutting measures. The group plans to reduce thousands of jobs globally and may even shut down some production facilities—an approach likely to face resistance in Germany due to its economic implications. The challenges faced by Audi are emblematic of the broader difficulties confronting Germany’s auto industry in navigating economic uncertainties and adapting to shifting market dynamics.