Squeezed profit forces Porsche to cut almost 4,000 jobs

Porsche is embarking on a significant restructuring effort, cutting 3,900 jobs as it faces declining sales in China, rising trade tensions, and a potential tariff battle with the United States. The German sports carmaker is adjusting its financial outlook and product strategy to maintain profitability.

The company announced the job reductions to boost efficiency and sustain long-term growth. Earlier this year, Porsche eliminated 1,900 positions in Germany and opted not to renew 2,000 temporary contracts. 

Revised margins

CEO Oliver Blume and CFO Jochen Breckner outlined the challenges during the company’s 2024 earnings presentation, warning that trade disputes and slowing Chinese demand would weigh on earnings into 2025.

The pressure on Porsche’s bottom line has led to a revised profitability target. Previously aiming for a return on sales of up to 19%, Porsche has now downgraded its medium-term margin goal to 15-17%. The company expects operating profit to take a hit in 2025, with projected revenue remaining flat at around €39-40 billion. 

These estimates do not account for potential tariffs from the United States, which President Donald Trump has threatened to impose on European imports, as these are not yet effective and subject to possible negotiations. Breckner indicated that Porsche might pass on some of these additional costs to consumers but remains hopeful that a “sensible” tariff regime will emerge.

A new SUV?

Porsche continues overhauling its lineup to remedy the crisis, balancing combustion engines, hybrids, and full-electric models. The company reaffirmed its commitment to a multi-powertrain strategy, extending the lifespan of combustion-engine models well into the 2030s while expanding its electrified offerings.

A fully electric Cayenne is set to debut later this year, but the gas-powered version will remain in production for years. The move underscores Porsche’s careful approach to electrification, as demand for EVs lags in some markets.

Additionally, the much-anticipated electric 718 Cayman and Boxster have been delayed to prioritize the Cayenne EV. However, Porsche insists the launch is still on track for the middle of the decade.

Meanwhile, Porsche is exploring the possibility of a new combustion and hybrid SUV positioned below the Cayenne, possibly replacing the phased-out gasoline Macan.

The company has also hinted at expanding the 911 lineup with limited-edition heritage models and a new flagship variant to push the boundaries of the iconic sports car.

A difficult 2024

Porsche’s 2024 financial results reflect a company under strain but still holding firm. Despite a challenging economic environment and a full-scale model renewal, sales revenue dipped slightly to €40.1 billion from €40.5 billion the previous year. However, operating profit fell by 23% to €5.6 billion, bringing the return on sales down to 14.1% from 18.0% in 2023.

The automaker delivered 310,718 vehicles in 2024, with strong performances in Europe, North America, and emerging markets offset by a sharp 28% drop in China.

The Cayenne led sales with 102,889 units, followed by the Macan (82,795), and the 911 (50,941). Electrified models accounted for 27% of deliveries, and the company expects this share to rise to 33-35% in 2025.

Porsche will invest an additional €800 million in 2025 to bolster its product portfolio, software capabilities, and battery technology. However, management warns that these investments, declining vehicle sales, and high production costs will weigh on next year’s profitability.