Porsche pivots to cost-cutting as sales come under pressure

[BERLIN] Porsche expects sales to remain under pressure in 2026, as the luxury carmaker grapples with tariffs and a costly course correction on electric vehicles (EVs).

Full-year revenue will decline slightly to, at best, 36 billion euros (S$53.2 billion), with the manufacturer contending with slumping sales in China, where consumers are switching to local brands.

The company plans to become leaner and expand into higher-margin segments to counter the challenges, it said on Wednesday (Mar 11).

CEO Michael Leiters said: “We will comprehensively reposition Porsche – make it leaner, faster and the products even more desirable.”

Having taken over the company from Oliver Blume in January, he is under pressure to turn its performance around.

The carmaker fell out of Germany’s benchmark DAX index in 2025, as it cut guidance four times – moves that also hit Volkswagen.

The parent warned on Tuesday that more cost savings were needed to counter rising competition.

Porsche predicts its operating margin to reach 5.5 to 7.5 per cent in 2026, an improvement over 1.1 per cent in 2025, when US duties and around 2.4 billion euros in charges tied to its EV strategy shift weighed on the result.

The company has previously said it expects improvements in 2026 after the trough in 2025.

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To achieve that, it will cut management layers and hierarchies, and reduce investments in the long term, it said on Wednesday.

The manufacturer is looking at models and derivatives above its two-door sports cars and the Cayenne sport-utility vehicle to bolster margins.

Leiters is expected to engage labour leaders in discussions over a fresh round of savings measures. The company plans to reduce headcount by some 3,900 people, including 2,000 temporary workers, by the end of the decade.

In China, where local competition is intensifying, Porsche’s sales slumped 26 per cent in 2025.

The country’s economic slowdown has hit consumers across income brackets, with a protracted real-estate crisis weighing on luxury spending.

Porsche is downsizing its dealer network in the country, and working to offer in-car software that better fits local tastes.

Another major challenge is its presence in the US, its biggest single market. The company imports all of the cars it sells there, with US President Donald Trump’s duties costing Porsche roughly 700 million euros in 2025.

Its struggles have forced the company to take drastic measures, such as shelving or delaying EVs and adding more models with combustion engines and hybrid powertrains.

The carmaker has also changed the majority of its board members. BLOOMBERG