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Audi seeks closer ties to Porsche in cost-cutting drive

INGOLSTADT (Reuters) - Audi will make greater use of vehicle platforms and technologies developed with Porsche and Volkswagen as it embarks on a 15 billion euro cost cutting and efficiency drive, Chief Executive Bram Schot said on Thursday.

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Audi, whose slogan is Vorsprung Durch Technik or Advantage Through Technology, was a key research hub within Volkswagen Group until its engineers were caught developing the engine software which masked excessive pollution levels.

Now new Chief Executive Schot is tasked with overhauling Audi and refocusing research efforts after senior engineers were forced out by the dieselgate scandal, which has cost parent company Volkswagen more than 28 billion euros.

“We are discussing what we do ourselves and where we share resources with other parts of Volkswagen. We ask ourselves: Do we need to do this in-house, is it standardized technology, and is it unique from the customer point of view,” Schot said.

As part of group-wide savings efforts at Volkswagen, Audi has surrendered responsibility for developing driverless cars to engineers at VW in Hanover, Schot said, adding that Audi still retains responsibility for making semi-autonomous cars which still require drivers.

Sources told Reuters in November that Audi may surrender its leadership in the area of developing self-driving cars as Volkswagen Group seeks to save costs.

Further savings could come from deepening a research alliance with Porsche, another premium brand owned by parent company Volkswagen.

“We can intensify our collaboration with Porsche,” Schot said. Porsche and Audi are already developing vehicle underpinnings for a premium electric sportscar, known as PPE. This vehicle platform will spawn a raft of premium electric cars, the company said.

Audi will offer about 30 electric models by 2025, the company said. The customer response to these vehicles will help determine the scale of possible job cuts, the carmaker said.

Audi workers have a job guarantee until 2025 but electric cars require fewer parts and fewer workers to assemble so Audi is working on a job cuts scheme which relies on voluntary redundancies through early retirement.

The carmaker declined to provide a figure for possible headcount reductions citing ongoing negotiations with labor representatives at Audi.

Audi, the premium brand owned by Volkswagen, said it expects to deliver an operating return on sales between 7 percent and 8.5 percent, below its long-term target, as costs for developing electric cars weigh on profits.

Audi aims to deliver an operating return on sales of between 9 and 11 percent in the long term, the carmaker said on Thursday.

Reporting by Edward Taylor; Editing by Riham Alkousaa and Michelle Martin