Porsche, once the world's most profitable automaker, is planning to slash a quarter of its workforce as weakening demand in China, President Trump's tariffs, and a costly reversal of its electric vehicle strategy have ended its hot streak. The company's profit margin plummeted to 1.1 percent last year from 18 percent two years earlier. Led by Michael Leiters, Porsche is betting on "value over volume" and aiming to reduce development costs by up to a fifth while raising the average price of its top-end models by about 20 percent to 330,000 euros. By 2030, Porsche plans to cut 9,000 jobs, or 25 percent of its workforce. The company is also adopting a more conservative approach in China, where deliveries fell by nearly a third in the first half of the year. "Competition has intensified, markets have become more volatile," said Mr. Leiters at the company's development hub near Stuttgart. Unlike BMW, Porsche can "afford to shrink while leveraging Volkswagen economies of scale," noted analyst Stuart Pearson. However, similar efforts at Mercedes have exposed risks, underscoring challenges ahead as Porsche faces mounting Chinese competition and reduced sales capacity.
The restructuring highlights broader struggles in the German auto industry, particularly as homegrown Chinese rivals dominate the electric vehicle transition. Porsche once relied on China for more than a third of its sales volume, but by 2030, China is expected to account for only one in 10 deliveries. Volkswagen, which owns 75 percent of Porsche, announced a €6 billion write-down last month and cut its profit forecast. Mr. Trump's tariffs imposed about €700 million in costs last year. Despite these challenges, Porsche remains focused on its iconic 911 and higher-priced sports cars, aiming to build a more resilient business model for the future.
Source: New York Times Business · Summarized by HeadlinesBriefing