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Audi said to target €10 billion in cost cuts to fund electric-car push

LiveMint logoLiveMint 31-07-2017 Andreas Cremer

Berlin: Audi aims to cut costs by €10 billion ($12 billion) by 2022 to help fund a shift to electric cars as it seeks to move on after the emissions scandal, people close to the carmaker said.

Audi, Volkswagen’s main profit driver, plans to bring five new all-electric models to market in coming years, starting with the e-tron sport-utility vehicle (SUV) to be assembled from 2018 in Brussels.

Despite run-up costs for its electric-car programme, the luxury automaker wants to keep its operating profit margin at 8% a year at least, two people close to Audi said. Its profit margin in the first half of 2017 was 8.9%.

The bulk of the €10 billion cost-savings would come from cutting research and development costs, the people said.

A spokesman at Audi’s headquarters in Ingolstadt, Germany, declined comment. German business daily Handelsblatt reported the cost-savings target and profitability plans earlier on Sunday.

Audi also aims to free up funds for investments in zero-emission technology by developing a new production platform with Porsche, allowing both Volkswagen premium brands to save money by sharing components and modules.

Audi is grappling with car recalls, prosecutor investigations and persistent criticism from unions and managers over the diesel emissions scandal and its strategy post-dieselgate.

The people told Reuters on 28 July that four of the brand’s seven top executives are earmarked for dismissal in the near future. On Sunday, people said the dismissals were discussed by supervisory board members on 27 July but a formal decision has yet to be taken. Reuters

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