Porsche has slashed its midterm profit targets as the luxury-car maker pledged cost cuts to offset rising trade tensions, slowing demand for its electric vehicles and intensifying competition in China.
Porsche, which is part of the Volkswagen group, said last month that it would plough €800mn into combustion engine vehicles and hybrids this year, rebalancing its product line away from electric vehicles, and cutting thousands of jobs in an effort to boost profitability.
Its chief executive Oliver Blume, who doubles as the VW boss, warned of a “volatile political and economic environment” as the company said it was now aiming for a profit margin of 15 to 17 per cent, down from a previous medium-term target of 19 per cent.
Porsche said the margin this year would be between 10 and 12 per cent, after posting a margin of 14 per cent in 2024. Shares fell more than 5 per cent on Wednesday.
The company said on Wednesday that operating profit had fallen by more than a fifth to €5.6bn last year, from €7.3bn in 2023.
Revenues were flat at €40bn as the number of vehicle deliveries slipped 3 per cent to 311,000. Deliveries of its all-electric Taycan fell sharply, dropping 49 per cent in the year.
The Stuttgart-based automaker shocked investors earlier this year when it revealed that sales in China had fallen by 28 per cent in 2024.
Porsche also flagged the potential impact of “geopolitical uncertainties” from US President Donald Trump’s threatened tariffs, adding that “further potential import restrictions and tariffs have not been factored in” to the company’s outlook.
The carmaker is particularly exposed to the threatened tariffs on car imports from Europe, as it manufactures all its cars in Germany. The EU levies 10 per cent on car imports compared to the 2.5 per cent by the US.
At a news conference on Wednesday, its chief financial officer Jochen Breckner said the group would consider ways to pass on the cost of the tariffs if they are implemented.
The weak performance has put Porsche in crisis mode. In the past months, the company has announced an overhaul to its board and 1,900 job cuts.
Porsche had earlier aimed for 80 per cent of its sports cars to be electric by 2030. “Our product strategy would still allow for it, but in view of the market development, it’s no longer realistic,” Blume said.
Despite the shift in its electric strategy, Bernstein analyst Stephen Reitman said it would take several years for the group to have a strong line-up of fresh petrol models with Blume suggesting that the new internal-combustion Macan would be launched towards the end of the decade.
“The assumption is that price or mix will more than compensate the decline in volume, which we struggle to see,” Reitman added.
