By Rachel More and Ilona Wissenbach
BERLIN/FRANKFURT, Oct 7 (Reuters) – Porsche is reshaping its business for a future with lower sales volumes, the sports car maker said on Wednesday, betting that a greater focus on high-end models will help restore its profit margins despite subdued demand.
The automaker, which like its parent Volkswagen is undergoing a major restructuring to address sluggish sales and high costs, said in its turnaround plan that it would lower its future break-even point to fewer than 200,000 units, well below last year’s total deliveries of 279,449.
Porsche’s global deliveries have already fallen by almost 10% since the year of its blockbuster listing in 2022, as plunging demand in China and tariffs imposed by the United States hit two of the brand’s most important markets.
During a capital markets day at the company’s development centre in Weissach, 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.
“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.
STEEP RETURN TO DOUBLE-DIGIT MARGINS
The CEO, who took over at the start of the year with the task of restructuring the company, said 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%.
Porsche’s profit margin collapsed last year to 1.1% – far below results in the high teens posted when it went public four years ago under Oliver Blume, Leiters’ predecessor, who remains CEO of parent Volkswagen.
Investors appeared to welcome the new strategy, with shares up 3.2% following its announcement.
The company is currently on track to reach the lower end of the medium-term range, Leiters said. An improvement would either require even tougher restructuring or “a more favourable environment”.
Porsche is cutting 9,000 positions by 2035, reducing its total workforce by a fifth, as job losses mount in the German automotive industry under pressure from low-cost Chinese rivals.
Alongside existing redundancy programmes and a plan to cut management positions by 40%, Leiters said lower development and sales costs would make the company more robust. The company also wants to intensify platform-sharing with fellow Volkswagen brand Audi to save money.
(Reporting by Rachel More and Ilona WissenbachEditing by Tomasz Janowski)
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