Porsche is changing its business for a future with lower sales volumes, the carmaker said on Wednesday. Like its parent company, Volkswagen, Porsche is undergoing major restructuring because of slow sales, and high costs.
According to its turnaround plans, it would lower its future break-even point to fewer than 200,000 units, well below last year’s total deliveries of 279,449. The company is betting that a greater focus on high-end models will help restore its profit margins despite subdued demand.
The carmaker’s global deliveries have have already fallen by almost 10% since the year of its blockbuster listing in 2022 amid decreasing demand in China, and U.S. tariffs affecting markets.
CEO Michael Leiters sought to assure investors that a focus on high-end sports cars, such as the 911, would put the carmaker back on track, with ambitions to boost the selling prices of Porsche’s top 10,000 vehicles, during a capital markets day at the company’s development centre in Weissach.
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“We want to reinforce Porsche as the world’s most desirable sports car manufacturer,” Leiters said, placing the brand alongside Ferrari and Louis Vuitton in terms of value.
Leiters also said that his strategy would focus on cutting costs for now. “We don’t know what the next crisis will look like or where it will come from. That is why Porsche needs to be adaptable, efficient and resilient,” Leiters said.
Porsche set its long-term target for a group operating margin of 15% as part of the strategy. In the medium term, meaning roughly within five years, it is aiming for a range of 10% to 15%.
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Porsche’s profits margin fell to 1.1 last year, far below the results it posted after it went public four years ago. Investors seemed to welcome this idea, according to the shares, which were up by 3.2% following the announcement.
Leiters also said that Porsche is currently on track to reach the lower end of the medium-term range. An improvement would either require even tougher restructuring or “a more favourable environment”.
Back in July, Porsche said it will cut 9,000 jobs by 2035, as its parent company, Volkswagen, and its brands undergo restructuring. This amounts to around one in five jobs. The carmaker’s management and labour representatives agreed to 5,000 additional job cuts that avoid compulsory redundancies through measures like natural attrition and voluntary schemes, after months of negotiation.