Profits plunged by 95.9% at Porsche in the first three quarters of the year compared to the same period last year, with a change of strategy regarding its electric vehicle rollout seen as partly to blame. Profit after tax for the period over the nine months came to only €114 million, the German sports carmaker revealed on Friday.
The main factor weighing down the company’s bottom line is a change in strategy by the management team led by Oliver Blume, who, for the time being, is still Porsche’s chief executive, although he is due to step down. Recently, ambitious electric vehicle targets were scrapped, along with the planned battery production. The launch of new electric models has also been postponed.
Operating profit for the first nine months was €40 million, down 99% on the previous year’s figure of just over €4 billion. In view of “market realities and customer needs,” the combustion engine is making a comeback and will be needed well into the next decade, the firm said.
The measures will cost a lot of money: extra costs of around €3.1 billion are expected in the 2025 financial year. Turnover shrank by 6% to just under 26.9 billion euros.
Lowest point?
According to Porsche’s CFO Jochen Breckner, the results reflect the negative impact of the strategic realignment. “We are consciously accepting temporarily weaker key financial figures to strengthen Porsche’s resilience and profitability in the long term,” Breckner said in a statement.
He added: “We expect that we will pass the low point this year and that Porsche will improve noticeably from 2026.” In recent years, the Stuttgart-based company has raced from success to success, and for a long time, it poured a large share of its profits into its parent company, the Volkswagen Group. In recent months, however, the sports car manufacturer has entered crisis mode.
Other headaches: China, the US, and e-mobility
The effects of US tariffs and weakening demand have also caused headaches for Porsche. The sports car manufacturer is entering its second year with sales declining. Some 215,500 vehicles were delivered so far this year, down 6% from the previous year.
In China, in particular, things got significantly worse. In the first nine months of the year, Porsche sold just under 32,200 cars in China, around 26% less than in the same period last year. Porsche had already lost ground in China. By comparison, in the same period in 2022, the firm sold some 68,700 vehicles, bringing total sales to around 221,500.
“The luxury market in China has completely collapsed,” Blume said recently. A quarter of Porsche’s previous total volume is no longer available as a result of this alone. Blume, who has also headed Volkswagen since September 2022, will remain at the helm of the sports car manufacturer until the end of the year. He will then move completely to VW Group headquarters in Wolfsburg.
In the US, Porsche has increased its prices to offset the Trump tariffs. Porsche has no production capacity in the US at the moment to possibly circumvent eventual tariffs.
Thirdly, Porsche hasn’t succeeded in convincing its mainly conservative clientele to switch to electric drive. Apparently, for many Porsche drivers, being seen — and especially heard — in a Porsche is one of the main reasons to invest in a car from Zuffenhausen. Electric Porsches don’t fit in this stratagem.
Cost-cutting program
In view of the economic problems, Porsche has to cut back and shrink its structures. By 2029, around 1,900 jobs are to be cut in the Stuttgart region in a socially responsible manner. In addition, the contracts of around 2,000 temporary employees will expire.
A further savings program is to be put together in the coming weeks. Negotiations are currently underway with the works council. CFO Breckner: “We have to assume that the general conditions will not improve in the foreseeable future. We, therefore, need to discuss far-reaching approaches in all areas, also in the context of the future package.” Job security is also likely to be discussed alongside additional job cuts, the German news agency DPA learnt.
