Audi to Cut 10% of Management in Cost-Cutting Offensive

In an interview (in German) with “Handelsblatt” published just ahead of a Supervisory Board meeting in Ingolstadt, Audi CEO Bram Schot announced plans to cut his management team by ten percent, slash one third of its engines and save 15 billion euros by 2022. “We have too many managers,” he says. He also wants to make the company “younger, more international and more female”.

In a move designed to increase the focus on electrification and digitalisation, in line with parent company Volkswagen, Schot is undertaking a clean-out on a scale not seen at the premium car maker for decades. “Electrification is coming faster than you think and we have to pursue this resolutely. I don’t do things by halves.”

Audi has been top heavy for some time, with the number of managers having grown far faster than the rank and file. The company has a high rate of employee retention, with promotion to management part of typical career development. However, contractual agreements that secure employment through 2025 mean there will be no forced redundancies. Schot plans to achieve his ten percent through “natural fluctuations”, although incentives for older managers such as voluntary redundancy and early retirement seem likely, too. However, the need to shift development focus to electric and autonomous drive as well as new mobility models means the company will have to substantially refocus its haloed Technical Development function in the process.

Cutting the engine range by one third is an outcome of ongoing rationalisation of engine technology across the Group using the modular approach already applied to its vehicle platforms. Moreover, Volkswagen has already stated that it will launch its last internal combustion engines in 2026.

As the main profit earner in the Volkswagen Group, Audi is under pressure from the new regime in Wolfsburg to get with the programme, shed its excess and prepare itself for the major changes currently transforming the auto industry. And that means getting on board with electric drive. Audi intends to have 12 electrified models on the market by the end of next year.

Audie e‑tron technology demonstrator showing off on the slopes
Image credit: Audi AG

Schot’s cost-cutting is also aimed at materials costs. Coming from a sales background, he took a close look at those variants and equipment lines with very little uptake and scored a big red line through them. “We can no longer afford models and equipment that very few customers buy. We can drop a huge amount of weight while losing very little volume.”

He also promised closer ties with Group sister company Porsche. “We have to play a game of catch-up with the competition. And being part of the Volkswagen Group will help us do that. We want to increase synergies through closer collaboration, especially with Porsche.”

All of this is a far cry from the conservative approach taken by his predecessor Rupert Stadler, who fell dramatically from grace last June when he was arrested and imprisoned in connection with the diesel affair. Originally appointed as caretaker CEO from his position as Board Member for Sales and Management, Schot became the permanent incumbent at the start of the year.

However, dramatic times call for dramatic actions.

Feature image provided by Audi AG

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