Porsche Plans Sales Contraction, 9,000 Job Cuts With Focus on Top-End Models
The German automaker is implementing its '35 strategy to boost margins amid declining sales and high costs, mirroring parent Volkswagen's restructuring efforts.
Porsche is preparing for a contraction in sales over the next decade and plans to cut approximately 9,000 jobs as part of a significant restructuring effort. The company announced its '35 strategy, which aims to increase profit margins by prioritizing high-end models and reducing its break-even point to under 200,000 units annually, down from 279,449 cars delivered in the previous year. This strategic shift follows a nearly 10% global slump in deliveries since Porsche's 2022 listing, attributed to decreased demand in China and tariff issues in the United States.
CEO Michael Leiters stated that the company will focus on luxury SUVs and performance sports cars, such as the 911, to steer the company back toward profitability. Porsche's profit margin fell to 1.1% last year, a sharp decline from the double-digit targets set during its public offering four years prior. Leiters' strategy contrasts with the approach of his predecessor, Oliver Blume, who now leads Volkswagen and is managing a broad overhaul of the parent group, including potential layoffs and plant closures.
Porsche is also re-evaluating its electrification strategy. While committed to introducing all-electric versions of the 718 Boxster and Cayman, their launches have been delayed. The company plans to introduce a new medium-size SUV in 2028 with internal combustion and plug-in hybrid powertrains, which is expected to contribute significantly to sales and profitability in 2029. New models are also planned for the high-margin executive vehicle segments currently served by the Panamera and Taycan. However, reports suggest the electric Taycan may be discontinued around 2030.
To reduce costs, Porsche will increase platform sharing with Audi, another Volkswagen Group brand. The company has also divested its stake in Bugatti Rimac and is closing several other subsidiary businesses as part of its cost-cutting measures. The reduction in workforce is described as a "socially responsible reduction of 9,000 jobs" to streamline the company towards a core workforce by 2035.