Under the name ‘Sportwagenschmiede ’35’, to be interpreted as ‘sports car craftsmanship in 2035’, Porsche just unveiled a sweeping strategy to cut costs sharply and focus on its most profitable vehicles in the coming years. Porsche has to be smaller and leaner again, ‘value over volume’, producing fewer but more profitable cars.

“With our strategy, we are creating the conditions to make Porsche significantly more efficient, productive and profitable in three phases,” said chief executive Michael Leiters, who has been in the job since January.

The immediate priority, he said at Wednesday’s capital markets day in Weissach, near Stuttgart, was to reduce costs and make the high-end German carmaker more financially robust. In the longer term, Leiters aims to slim down the company, a potentially difficult move in an automotive industry where economies of scale play a major role.

Porsche is under considerable pressure, struggling with falling sales figures, particularly in China, weaker demand for electric models, and US tariffs. It also incurred massive costs to reverse its strategy and extend its combustion engine line-up, which ate up the vast majority of the company’s profit in 2025. Post-tax profit collapsed by 91.4% year-on-year to €310 million.

Cost-cutting

Porsche said it plans to cut development costs for future model lines by up to 20%. Personnel costs in manufacturing are to fall by up to 30% in the medium term, while sales and distribution costs are to be reduced by 20%. The company is targeting a reduction of around 10% in individual material costs. The number of model variants is also set to decrease.

The strategy’s key pillars are a focus on the core business and a leaner organization. Porsche said it will reduce management positions by 40% in the medium term. The carmaker is ultimately aiming for a significantly lower break-even point, which is to be reached at fewer than 200,000 units. CEO Leiters said many parts of the company had previously been geared towards producing 350,000 cars, reflecting the growth trajectory of recent years.

Earlier this year, management and employee representatives agreed on a cost-cutting program to eliminate a further 5,000 jobs in the Stuttgart region by 2035. In return, they ruled out compulsory redundancies until the end of 2035.

Porsche has already implemented reduction programs previously, including at its Leipzig plant and at subsidiaries. “Overall, the workforce in direct and indirect areas will be reduced by 25% in the medium term, with a strategic target of 30%,” the company explained.

Another painful year?

CFO Jochen Breckner said he expected 2027 to be another tough year for the company, with sales and profitability likely to fall below 2026 levels. For the current year, Porsche is forecasting revenue of between €35 billion and €36 billion, with an operating profit margin of 5.5% to 7.5%. Breckner said he expected the first positive effects of the new strategy to become apparent from 2028.

High-end luxury or sporty

As part of the turnaround plan, Porsche aims to increase the share of high-end luxury models from around one-third to almost half of all vehicles sold. By 2030, it plans to raise the average selling price of its 10,000 most expensive cars from €270,000 to €330,000.

The company is planning a larger, more expensive SUV, and a two-door super sports car positioned above the iconic 911 is also expected to join the range. For individual models, prices can exceed several million euros. Leiter gave an example of a recent Porsche sold for €13.46 million.

Furthermore, the very profitable 911 will have to represent 45% of total turnover in the future, and yesterday Leiters promised that his most successful icon will never be electric. Apparently, Porsche is convinced that its 911 clientele, on which it will still be largely dependent, still goes for the vibrations and thrills of an internal combustion engine.

On the other hand, the automaker has made it clear that the new 718 Cayman and 718 Boxster will be offered with electric powertrains only, putting rumors and even its own previous statements to rest. The two-door EVs will debut next year, with Porsche saying that the first full year of production will happen in 2028.

Hybrid policy

Speaking of the portfolio, the German luxury brand is looking to introduce more models starting in 2028. A new compact SUV, developed in cooperation with Audi, with gas and plug-in hybrid powertrains, will be sold alongside the electric Macan. The large SUV that would sit above the Cayenne, codenamed K1, was supposed to debut as an EV first, but the automaker later changed course and said it would debut with gas and PHEV configurations.

The German marque is also developing a potential mid-engined super-sports-car platform, which could be positioned above the 911. The new architecture will debut in a concept car dubbed the Mission S, which will debut on October 15. We’re curious whether that car will forgo electric power entirely or adapt it. Most probably, it will be a super-powerful hybrid.