Porsche in Trouble, Plans Cost-Cutting Measures

Written by Kathrine Frich

Oct.26 - 2024 12:20 PM CET

Autos
Photo: Shutterstock
Photo: Shutterstock
Porsche’s largest single market, face a major slowdown.

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German automaker Porsche reported a sharp drop in net profit, down 29.8% to approximately $2.92 billion through September.

Major Slowdown in Sales

The decline comes as sales in China, Porsche’s largest single market, face a major slowdown, compounded by weaker demand for electric models globally.

The company’s revenue dropped by 5.2% to about $30.2 billion in the same period, with approximately $27.3 billion coming from its automotive division — a 6.9% decline from last year.

Operating profit (EBIT) fell by 26.7%, hitting around $4.27 billion, while return on sales dropped to 14.1%. For the third quarter alone, revenue decreased by 6.1% to roughly $9.6 billion, according to El Economista.

Dropped 29%

Porsche sold 221,304 vehicles by the end of September, down nearly 12% year-over-year, with total deliveries declining by 6.9% to 226,026 units.

In China, where vehicle registrations dropped almost 29%, Porsche expects flat growth in 2025 compared to this year and is planning a substantial cut to its local dealership network.

“We’re not exiting the Chinese market, but we must face reality,” a Porsche representative stated.

The luxury carmaker is now evaluating a cost-cutting strategy and revising its model lineup to reflect slowing global demand for electric vehicles, a trend acknowledged by CFO Lutz Meschke.

He warned that the third quarter was the weakest of the year so far. Porsche is targeting annual sales of around 250,000 vehicles — down from the more than 300,000 vehicles it registered in recent years.

Despite the challenges, Porsche is maintaining its full-year outlook, forecasting annual revenue between $41.3 and $42.3 billion and an operating margin of 14-15%, with hopes of a late-year recovery in demand.

In July, Porsche revised its yearly guidance, projecting up to a 15% return on sales.