Porsche braces for lower sales era, seeks lifeline from luxury

Porsche Focuses on Luxury as Sales Drop and Margins Fall in Global Markets

Porsche's Strategic Response to Global Market Challenges

By Rachel More and Ilona Wissenbach

Sales Decline and Turnaround Plan

BERLIN/FRANKFURT, Oct 7 (Reuters) - Porsche is steeling itself for persistently lower sales, the Volkswagen brand said on Wednesday, pitching a turnaround plan to investors that aims to boost margins with a focus on top-end models.

The sports car maker, which, like parent Volkswagen, is undergoing restructuring to address weak demand and high costs, said it would lower its future break-even point to fewer than 200,000 units, compared with total deliveries last year of 279,449.

Impact of Global Markets

Porsche has already seen deliveries slump by almost 10% globally since the year of its blockbuster listing in 2022, as plunging demand in China and tariff woes in the United States hit two of the brand's most important markets.

Focus on High-End Models and Margin Targets

During a capital markets day at the company's development centre in Weissach, CEO Michael Leiters will seek to assure investors that a focus on high-end sports cars like the 911 and luxury SUVs will put the carmaker back on track.

Margin Goals

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%.

Recent Margin Performance

Its profit margin collapsed last year to 1.1%, a fraction of the double-digit, Ferrari-style margins targeted when the Stuttgart-based carmaker went public four years ago under Oliver Blume, Leiters' predecessor.

Restructuring and Cost-Cutting Measures

Blume remains CEO of Volkswagen, where he is battling with unions to push through a drastic overhaul of the German auto group, including some 100,000 layoffs worldwide and the closure of up to four German plants.

Porsche, for its part, 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.

Strategic Shifts and Partnerships

Leiters is pursuing a "value over volume" strategy and pivoting back to combustion-engine models after costly missteps on EVs under Blume.

He also hopes to cut development costs by increasing platform-sharing with fellow Volkswagen brand Audi, the company said on Wednesday.

CEO's Vision for the Future

"The ultimate goal is to further strengthen our unique sports car brand — across all model lines and with new, highly desirable models in particularly high-margin segments," CEO Michael Leiters said. "At the moment, the main focus is on reducing costs and making the company more financially robust."

(Reporting by Rachel More and Ilona WissenbachEditing by Tomasz Janowski)