Sports car manufacturer Porsche said on Wednesday that it is restructuring its business in view of lower sales volumes in the future. The company is betting that a greater focus on premium models will help restore profitability despite subdued demand, UNN reports, citing Reuters.
The automaker, which—like its parent company Volkswagen—is undergoing a major restructuring to overcome the effects of sluggish sales and high costs, said in its business recovery plan that it would lower its break-even point to fewer than 200,000 vehicles. This is significantly below last year's figure, when total deliveries amounted to 279,449 units.
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Porsche's global deliveries have already fallen by almost 10% compared with 2022—the period of the company's successful stock market debut. The decline was caused by falling demand in China and the introduction of tariffs by the United States, which negatively affected the brand's two most important markets.
At an investor event at the company's development center in Weissach, CEO Michael Leiters sought to convince attendees that a focus on high-end sports cars, such as the 911 model, would help the company regain its position; ambitious plans were also announced to raise prices on Porsche's 10,000 most expensive cars.
"We aim to strengthen Porsche's status as the world's most desirable sports car manufacturer," Leiters said, outlining a strategy of moving into the luxury segment to place the brand alongside manufacturers such as Ferrari.
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The CEO, who took over the company at the beginning of the year with the task of carrying out a restructuring, said that for now his strategy would focus on cutting costs.
In the long term, Porsche plans to achieve an operating margin of 15% for the group, although, according to its medium-term forecast, a return to double-digit figures is expected only over the next five years.
Last year, Porsche's profitability fell sharply to 1.1%, well below the 17–19% levels recorded when the company went public four years ago under Oliver Blume, Leiters's predecessor, who now heads parent company Volkswagen. The updated strategy initially sent the shares up 5%, but the trend later reversed: as of 14:19 GMT, they were trading 1.2% lower.
Chief Financial Officer Jochen Breckner said that in the medium term, sales volumes are expected to remain at last year's level despite a sharp decline in performance in China.
This market, once the main driver of Porsche's growth, is expected to account for less than 10% of global sales in the coming years (by comparison, the figure reached 35% at the beginning of the decade).
"Regaining our position in China is not currently part of our plans," Leiters said.
Porsche plans to cut 9,000 jobs by 2035, reducing its total workforce by one-fifth, amid growing layoffs in Germany's automotive industry, which is under pressure from cheaper Chinese competitors.
In addition to existing workforce reduction programs and a plan to reduce the number of management positions by 40%, Leiters emphasized that lowering development and sales costs would make the company more resilient.
The company also aims to step up the practice of sharing platforms with the Audi brand (which is also part of the Volkswagen Group) in order to save costs.