Investing.com -- Audi AG, the unit of Volkswagen (ETR:VOWG_p) on Tuesday reported a decline in revenue and profits for the 2024 fiscal year as the company undergoes a major restructuring to cut costs and adapt to a shifting automotive market.
The German automaker reported a decline in revenue and operating profit for the 2024 fiscal year, citing an 11.8% drop in vehicle deliveries.
Revenue fell to €64.5 billion, a 7.6% decrease from the previous year, while operating profit plummeted to €3.9 billion, down from €6.3 billion in 2023.
The financial statement also showed that restructuring costs, including the closure of the Brussels plant, impacted operating profit.
On Monday, the company announced plans to eliminate up to 7,500 jobs in Germany by 2029, primarily affecting administrative and development sectors.
The decision, agreed upon by both management and labor representatives, is expected to save the company €1 billion annually in the medium term.
At the same time, Audi has committed to investing €8 billion in its German facilities over the next four years.
The job cuts come as Audi works to streamline operations, cut costs, and focus on new models while facing increased competition and a shifting automotive market.
CEO Gernot Döllner emphasized the strategic overhaul underway at Audi, stating, "We are strategically realigning Audi – with new models, a stronger setup in China, and more efficient structures within the company."
The company is focused on launching over 20 new models by the end of 2025, with half of them being fully electric.
Additionally, Audi is making a push into key international markets, particularly China and North America, where it is adjusting its strategies to strengthen its competitive position.
The broader auto industry has faced significant headwinds, including supply chain disruptions, economic slowdowns, and fluctuating consumer demand.
In response, Audi is implementing its "Performance Program 14," a plan designed to simplify operations and ensure financial stability for future investments.
CFO Jürgen Rittersberger acknowledged the difficult road ahead: "Amid a difficult environment, we kept Audi on track in 2024. However, we still have a tough road ahead of us."
While Audi has reaffirmed its commitment to electrification, the transition has come with growing pains.
The company is rolling out a new generation of plug-in hybrids and fully electric vehicles, but demand for its electric models saw a decline in 2024, with fully electric car deliveries down 7.8% year over year.
This underscores the challenges traditional automakers face in competing with established electric vehicle manufacturers while maintaining profitability.
Audi projects revenue between €67.5 billion and €72.5 billion for 2025, with an expected operating margin of 7-9%.
However, the financial outlook remains uncertain due to ongoing economic pressures and increasing competition. The company acknowledges that further adjustments may be necessary as it navigates this period of transformation.