The end for Audi factory Brussels?
In the autumn of 2021, the eight-millionth vehicle rolled off the assembly line at the Brussels plant, an Audi e-tron in glacier white metallic. For the Ingolstadt-based automaker, owner of the site since 2007, it was a reason to celebrate. Audi's CEO, Markus Duesmann, expressed his enthusiasm for the site. The Volkswagen premium brand let this be known in a statement, coupled with the fact that the plant had been honoured as the „Factory of the Future“ just a year earlier.
Times can change quickly. Now, Gernot Döllner is the fourth CEO in six years at Audi's helm. The term „Factory of the Future“ is no longer applicable to the Brussels factory, once praised as a leader in electromobility and sustainability. Less than three years after the aforementioned celebration, the future of the award-winning plant looks grim. The reason is that the Audi Q8 e-tron, a luxury electric SUV, is facing declining sales. The relatively high production costs might soon lead to an early end of the model's production.
Too expensive
This will require a restructuring effort costing billions, forcing Audi's parent company Volkswagen to revise its profit forecast for 2024. Given the situation in Brussels, Volkswagen might decide to close the factory. In the competitive field of electromobility, maintaining competitiveness is crucial. As Chinese competitors push into Europe and aggressive challengers like BYD build factories in low-wage regions to counter the effects of the Europe-China trade dispute, the expensive Belgian location is no longer viable amid declining orders.
Furthermore, with an operating profit margin of just 3.4%, Audi remains a major concern within the VW multi-brand group. Supply chain issues, particularly with V6 and V8 engines, have eroded margins over the past years. Delays in the launch of new models have also been a significant problem in the competitive market. The company now faces the urgent need to refresh its model lineup with new product launches. Additionally, measures to increase profitability are essential to fund Audi's transition to a premium electric vehicle manufacturer. Shutting down production at a plant with no future is only a small step in this broader strategy.
