Porsche AG is finalizing discussions on additional cost cuts, aiming to reach an agreement with worker representatives by the factory summer break in July. This initiative is part of the German luxury automaker's preparation for a period of reduced vehicle production and comes in response to US tariffs, a worsening slump in China, and increasing competition in Europe. CEO Michael Leiters, who took over in January, has been vocal about the need for these measures, having already started discussions on cost savings last year.
Porsche is sticking to its financial targets, projecting its operating margin to recover to between 5.5% and 7.5% this year, despite a sharp fall to 1.1% last year. Leiters acknowledges that a return to past high margins won't happen in the short term due to the challenging environment. The company plans to reduce its production capacity to better align with a demand downturn, particularly after global sales fell from a peak of 320,221 units in 2023 to 279,449 units in 2025. This reduction in capacity is also aimed at reining in spending, which Leiters noted had "spiraled out of control" in recent years.
The strategic overhaul includes streamlining the product offering and focusing on higher-margin sports cars. While considering a new sports car positioned above the 911, Porsche intends to retain the entry-level 718 range to attract new customers. There are also rumors of potential job reductions between 2,000 and 4,000 positions, or possibly more, though Leiters has not commented on such speculation. A recovery plan outlining these strategies is expected to be detailed at a capital markets day in October, with Leiters confirming the 2026 forecast despite the challenging environment.
Challenges persist, including a 21% slump in deliveries in China and the discontinuation of the Macan and 718 lineups in Europe, contributing to the overall sales decline. Porsche also posted an operating profit of 595 million euros ($696 million) for the first quarter, yielding a return of 7.1%, which was at the upper end of its forecast, but still lower than the previous year due to tariffs and lower deliveries. Cooperation with fellow Volkswagen Group brand Audi is being strengthened to improve efficiency and support future product development.
