MUNICH -- Audi plans to eliminate about 15 percent of its German workforce to lift earnings by 6 billion euros ($6.6 billion) as the automaker pushes ahead with a restructuring plan to help adapt to the costly transition to electric cars.
The Volkswagen Group premium brand said it will cut up to 9,500 jobs by 2025 but would also create up to 2,000 new positions in the areas of electric mobility and digitalization.
"The company must become lean and fit for the future, which means that some job profiles will no longer be needed and new ones will be created," Audi said in a statement on Tuesday.
The positions will be reduced through attrition and voluntary measures including early retirement, Audi said after reaching an agreement with employee representatives.
The approximately 50,000 remaining Audi employees in Germany will have job guarantees through 2029.
Audi will streamline its German plants in Ingolstadt and Neckarsulm to annual production of 450,000 and 225,000 units respectively, adding electric-car production at the two factories to ensure sufficient output.
Audi's talks with labor unions on the job cuts had dragged on for months, and VW Group appointed former BMW executive Markus Duesmann, 50, as the brand's new chief starting in April to advance the process. He will replace Bram Schot, who succeeded Rupert Stadler after his arrest in connection with the diesel crisis.
Audi's boss, Peter Mosch, said: "We have reached an important milestone: The jobs of our core workforce are secure."
Audi has been pushing for a fresh start with a review of its product range, which led to the decision to halt the TT coupe. The former design icon will be replaced with a battery-powered model.
To revive momentum, Audi will launch five fully-electric and seven plug-in hybrid models within two years and broaden the lineup to more than 30 electrified cars by 2025. But the transition will be costly after higher spending on electric models such as the E-tron contributed to returns last year dropping to 6 percent from 7.8 percent. Audi builds the E-tron at its factory in Brussels.
Audi said the job cuts, which will also include management positions, will help it reach a profit margin of 9 percent to 11 percent.
Audi targets slightly higher deliveries and revenue this year, and an operating profit margin between 7 percent and 8.5 percent.
Automakers are struggling with an auto industry downturn, particularly in the key market of China, and the need to increase investment in electric vehicles as several countries move to eventually ban conventional combustion engines.
Complying with tighter European emissions rules requires significant investment, while trade wars and uncertainty related to Brexit fallout adds to the complexity of managing the disruptive technology shift.
Audi has been wrestling with stricter WLTP emission-test procedures that took effect in Europe last year and led to significant production bottlenecks that disrupted deliveries.
Bloomberg contributed to this report