Abstract:
Porsche announced a restructuring plan on Wednesday that will eliminate about 9,000 jobs by 2030, equivalent to 25% of its total workforce. The Volkswagen Group's luxury sports car brand is facing falling sales and the fallout from its shift to high-cost electric vehicles.
Porsche said that the scale of layoffs may eventually reach 30% of the total number of employees, some of which have been previously announced. The company's profit margin was just 1.1% last year, compared with 18% two years ago.
Porsche CEO Michael Letters announced the restructuring plan, called "Sportwagenschmiede '35," on Wednesday at a capital markets day event held at the Weissach R&D center near Stuttgart, Germany. The core of this strategy is to "sell fewer cars, but sell them more expensively."
Porsche plans to increase the average selling price of its high-end models by approximately 20% in the medium term, while reducing the number of models and configuration versions by approximately 20%.
The Chinese market is at the heart of Porsche's current woes. According to reports, Porsche's sales in China fell by nearly one-third in the first half of this year compared with the same period last year. At its peak, the Chinese market once accounted for more than one-third of Porsche's global sales, but the company expects this proportion to drop to about 10% by 2030, that is, only one in every 10 new Porsche cars will be delivered to Chinese consumers.
Letters said: "The market environment has changed dramatically. We believe that returning to past levels at all costs is neither realistic nor in the interests of the brand."
The restructuring will also reduce R&D costs, with the goal of reducing them by up to 20% in the medium term; production personnel costs are planned to be reduced by up to 30%. Management positions will be cut by 40%.
In terms of profit targets, Porsche plans to increase the group's operating profit margin to 10% to 15% in the medium term, and the long-term target is 15%.
Product strategy will also be adjusted. Porsche plans to launch pure electric versions of the 718 Boxster and Cayman in 2028, as well as a new B-class SUV equipped with a fuel engine. In addition, the company also plans to develop a supercar platform positioned higher than the 911.
Porsche's difficulties have also further dragged down parent company Volkswagen Group. Volkswagen holds a 75% stake in Porsche. Earlier this year, VW approved a larger restructuring plan that aims to cut 100,000 jobs across the group and boost operating profit margins to 9% by 2030.
It is reported that the decline in Porsche's performance is one of the important reasons why the Volkswagen Group announced an impairment of 6 billion euros last month. In addition, the tariffs imposed by the United States also brought additional costs of approximately 700 million euros to the Volkswagen Group last year.
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