Porsche plans to cut nearly 4,000 jobs to improve efficiency. The company is struggling with lower sales and higher costs.
Stock Falls After Profit Warning
Porsche shares fell 4.9% in Frankfurt on Wednesday. This happened after the company issued its second profit warning in two months. Sales are down, and costs are rising.
In 2024, Porsche reported €40.1 billion in group sales revenue. This was a 1% drop from the previous year. The company tried to reduce losses by adjusting prices and offering more customization. Still, profits fell.
Porsche’s operating profit dropped from €7.3 billion in 2023 to €5.6 billion in 2024. The return on sales went from 18% to 14.1%. This shows tighter profit margins.
In February, Porsche invested €800 million in hybrid and internal combustion engine models. This move will affect profits this year. The company will cut 1,900 jobs by 2029. Another 2,000 temporary contracts will not be renewed. Workers can take severance pay or retire early.
Tough Market Conditions
Russ Mould from AJ Bell says the auto industry is facing problems. The shift to electric vehicles (EVs) is slow. Rules are unclear, and demand is uncertain. Chinese carmakers are expanding. Weak consumer confidence is making things worse.
“Porsche has faced delays in launching new models,” Mould said. “Trade tariffs add more pressure. Hitting a 20% profit margin will be difficult.”
Porsche hopes its restructuring will help. But fast improvements are unlikely. The Volkswagen-owned brand wants profit margins above 20% in the future. Right now, experts expect margins between 15% and 17%.
Competition Is Getting Stronger
Luxury car brands like Audi and Mercedes-Benz are struggling too. Demand in China is falling. Higher living costs make buyers cautious.
In Europe, Chinese EV makers are gaining ground. Companies like BYD, Geely, and SAIC are offering stylish, affordable cars. This puts pressure on Porsche and other luxury brands.
Weak EV demand in Europe is another problem. High interest rates and inflation make it hard for people to buy expensive cars. Even Tesla is struggling. The company’s stock has fallen 40% this year.
Tesla Faces Its Own Problems
Tesla has lost buyers for other reasons too. CEO Elon Musk’s political views have caused controversy. His involvement in U.S. politics and support for far-right figures in Europe has pushed some customers away. The business impact of these controversies has made Tesla’s position more uncertain in an already competitive market.
Porsche is trying to adapt to the changing market. But challenges remain. The company has not shared more details about future investments.