The fact that the global auto industry is going through a rough patch was once again evident after the German premium car brand Audi said that it would cutting down 7,500 jobs.
The company further said that by 2025, it would cull a total of 9,500 jobs which is about 10 per cent of its total workforce globally. However the company said that it would also create 2000 new jobs related to its electric mobility platform and for other new and developing technologies.
Turnover and retirement would be the means by which the company will achieve the job cuts target, said Audi, which is owned by Volkswagen. The company however confirmed that the rest of the staff will have guaranteed jobs till 2029. According to the company, this scale of job cuts will result in the company saving up to €6 billion or $6.6 billion in a period of 10 years which it would be reinvesting in its program of cars for the future.
These jobs cuts have been negotiated already with the worker representatives and the measures will allow the company to completely overhaul its two major factories in Germany that would be later put to use for manufacturing of electric vehicles. It is expected that a total output of 675,000 cars a year will be achieved by its plants in Neckarsulm and Ingolstadt, where its headquarters are located.
The growing trend and demand for electric vehicles in some of the major auto markets of the world has forced major auto companies to make huge investments and completely alter their business models to get ready to manufacture new age vehicles such as EVs and self driving cars.
And Volkswagen is no exception to that trend. Tens of billions of dollars to make an electric or hybrid version of every vehicle in its lineup is being spent by the group that also owns Porsche, Bugatti, Skoda and Lamborghini. The company has announced its plans to launch 70 new electric models by 2028.
And a major role in this transformation will be played by Audi with the brand having already launched its first electric SUV, the e-Tron. The model was manufactured at the company’s plant in Brussels which earlier used to make powerful cars that run on conventional fuel.
The reason that auto companies find employee redundancy in manufacturing of electric cars compared to those with internal combustion engine because electric vehicles have fewer parts and hence need lesser number of workers to assemble.
However the cost of developing electric vehicles is also much more compared to conventional cars. This escalation in costs has forced a number of auto companies to join hands and resources with other companies – even rivals, while acquiring others.
For example, Fiat Chrysler and Peugeot owner PSA Group are in negotiations for a merger and the new entity will create one of the largest auto companies of the world. A joint venture had been formed between German carmakers BMW and Daimler with the aim of developing driverless technology. And investment in General Motors’ self-driving car unit has been made by Honda.
(Adapted from CNN.com)