Porsche is reportedly set to intensify its cost-cutting efforts as the luxury car manufacturer faces headwinds from declining sales in China and the impact of US import tariffs.
According to a memo to staff from CEO Oliver Blume, which was obtained by Bloomberg, the company is set to commence discussions on further cost-saving measures in the latter half of the year.
Blume said: “Our business model, which has served us well for many decades, no longer works in its current form.”
The company is contending with “lower-than-expected” demand for electric vehicles (EVs) and sluggish luxury car sales in China, which is said to be a competitive market for battery-powered vehicles.
In the US, Porsche's largest market, the company is feeling the pressure of President Donald Trump's trade policies, which are affecting profit margins.
Earlier in the month, the company cautioned about the challenging sales outlook for the year, citing a slowdown in the US and ongoing weakness in China.
The proposed cuts, which will be negotiated with labour leaders, aim to improve the company’s profitability over the coming years.
The automaker has set a medium-term operating margin target of 15% to 17%, up from 8.6% in the first quarter (Q1).
Following the example of its parent company, Volkswagen, Porsche is seeking to reduce production costs in Germany, where labour and energy expenses are said to be significant.
Volkswagen reached an agreement with unions late 2024 to cut production capacity and minimise its workforce by 35,000 over the next five years.
In April 2025, Porsche revised its financial outlook for this year, citing a challenging Q1 influenced by a downturn in China, rising supply chain expenses, and the US tariff impact on the automotive industry.
The manufacturer reported a decrease in group sales revenue for the quarter, ending 31 March, to €8.86bn ($10.01bn) from €9.01bn in the same period last year.
The 1.7% decline in sales revenue was primarily due to lower vehicle sales, despite positive pricing and customisation effects.
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