MUNICH: Audi's profits collapsed in 2024, as the Volkswagen subsidiary reported on Tuesday a 33% decline in after-tax profits to €4.2 billion (RM20.2bil).
Audi - like many other car manufacturers - suffered from weak demand and price wars in China.
In the first half of the year, the company, based in Ingolstadt near Munich, also had problems with a lack of parts for larger engines.
Its bottom line was also hit with provisions for its Brussels' plant closure.
The slump in sales of the core Audi brand also had an impact on overall turnover, which fell by almost 8% to €64.5 billion (RM311bil).
"A year ago, we said that 2024 would be a year of transition. Unfortunately, this has proven to be completely true," Audi CEO Gernot Döllner said, commenting on the figures.
He added that the challenges have not diminished, saying weak demand has been met with increased supply - particularly in China.
The three smaller brands in the Audi Group - Bentley, Lamborghini and Ducati - performed better and significantly boosted earnings.
Each of them achieved higher operating margins than the core brand Audi - above all Lamborghini, which, with a margin of 27%, is in a league of its own, according to CFO Jürgen Rittersberger. By contrast, Audi's margin was just 4.6%.
Audi aims to increase sales, revenue and profit again by 2025, but it won't be easy. "We still have a long way to go," said Rittersberger. "The markets remain highly competitive."
In addition, there is still a reluctance to buy in China, where Audi expects only a sideways movement in sales. New models should help, however. More than 20 will come onto the market in 2024 and 2025, Döllner said.
Audi is not the only German automaker to face slumping profits. Its two top competitors BMW and Mercedes-Benz have also reported declines, as has its parent company VW.
But in comparison with its arch-rivals from Stuttgart and Munich, Audi is performing poorly. Although Mercedes' profits fell by 28%, they still amounted to €10.4 billion, while BMW's profits fell by 37%to €7.7 billion. Both figures a long way off those of Audi.
Audi is responding to its current difficulties with thousands of job cuts, which the firm's leadership announced on Monday.
The carmaker said up to 7,500 jobs in Germany will be scrapped by 2029, albeit without any redundancies, among other financial cutbacks. In the medium term, Audi expects these measures to save at least €1 billion a year.
After a long struggle, an agreement was reached with the employee side that includes an extension of job security provisions until the end of 2033 and a bonus for members of the IG Metall union.
