Porsche says it will slash its workforce by 3,900 jobs and plans further cuts as part of a major restructuring aimed at turning around its profitability, as sales in China plummet and the threat of U.S. tariffs and other trade obstacles loom.
The trade tensions and increased competition in the Chinese market are expected to impact 2025 earnings, regardless of any tariffs Donald Trump's administration may impose on European imports, Porsche said on March 12 when presenting its 2024 results.
The threat of U.S. taxes
Porsche plans to pass on some of the costs associated with the new U.S. taxes to its consumers, although the company continues to hope for a more “reasonable” trade policy.
“When the situation becomes more concrete, we will evaluate the pricing options to be applied to consumers,” said Porsche CFO Jochen Breckner at the annual results presentation.
Lower profitability and revised targets
Faced with falling sales in China, Porsche has lowered its profitability forecasts. The brand is now aiming for an operating margin of 15-17 percent in the medium term, down from the previous target of up to 19 percent.
Investors punished the announcement, leading to a sharp fall in Porsche shares over the last month. The brand forecasts a 2025 margin of between 10 and 12 percent, impacted by investments in new internal combustion engines and plug-in hybrids.
Expected sales for 2025, estimated at between 39 and 40 billion euros, do not take into account any new tariffs imposed by the United States.
A Chinese market in crisis
Introduced to the stock market in 2022 with a higher valuation than its parent company Volkswagen, Porsche has since lost ground, suffering in particular from the slowdown in the Chinese market, where its sales fell by 28 percent in 2024.
Like Volkswagen, which recently announced stable margins for 2025 due to cost-cutting efforts, Porsche is also counting on a reduction in its workforce to achieve long-term profitability of 20 percent.
Lower profits and higher investments
In 2024, Porsche saw its operating profits fall by 23 percent to 5.6 billion euros, with a margin of 14.1 percent despite stable sales compared with the previous year.
The 2025 year will mark a major repositioning, with substantial investments in models, software and batteries forecast to impact financial results.
A return to combustion and hybrid engines
With demand remaining weak for its 100-percent electric models like the Taycan and the new Macan EV, Porsche is repositioning by focusing more on hybrid and internal combustion engines.
The company plans to launch a new generation of the 911 and is considering a new range of SUVs for the end of the decade. Porsche has also announced an investment of 800 million euros to develop new gas-engine models, confirming its intention to extend the ICE range until the 2030s.
Downsizing and temporary contract cuts
Earlier this year, Porsche had already announced a reduction of 1,900 jobs in Germany, in addition to an earlier decision not to renew 2,000 temporary contracts.