Report – Audi planning on cost reduction plan hike image

According to sources that have knowledge of the company’s plans, Audi wants to offset increased technology spending with a cost reduction strategy that would see savings of up to 2 billion euros ($2.5 billion) annually.

Just a hair behind BMW in recent months, Audi is the world’s second-biggest premium automaker and mulls to become top dog even as the executives implement a strategy to keep at bay expenses coming from the development, purchasing and manufacturing units. All that is needed to keep up the profit margins, said the people, who talked to Bloomberg on condition of anonymity.

The plan to cut costs is known since July, when Audi Chief Executive Officer Rupert Stadler started “a fitness program,” asking employees of the Ingolstadt, Germany-based company to prepare for the rising cost of introducing new electric vehicles, self-driving and communications systems and the construction of new assembly facilities.

Audi AG, a wholly owned subsidiary of Volkswagen AG and the Group’s largest profit contributor, has at hand a 22 billion-euro investment budget over the next five years and 70% of the sum is destined towards new products and technology. The rest is kept for manufacturing expansion, with new factories to be built in Brazil and Mexico.

Audi mulls sales that for the first time would reach over 1.7 million units and wants to fight BMW for the luxury segment reign with 17 new or revamped models in 2014, including a new electric-only version of the R8 supercar.

Via Bloomberg