By DCB Editorial, March 12, 2025
Porsche’s shares reversed course, plummeting 1.5% in early trading, as the luxury automaker slashed its profitability targets yet again—a stark reminder of the deeper malaise affecting the industry. The company announced it would be cutting 3,900 jobs as part of a major restructuring to address its shrinking profitability, brought on by collapsing sales in China and the looming threat of tariffs on its exports to the U.S.
A symbol of luxury and cutting-edge engineering, Porsche now expects a return on sales between 15%-17%, a sharp drop from the 19% goal it set during its 2022 stock market debut. This staggering revision underscores the pressure mounting on the company, which is struggling to maintain its image amid a deteriorating market. Weakened demand for electric vehicles in Europe and plummeting sales in China have forced Porsche to repeatedly lower expectations, exposing the fragility of its high-priced promises.
In the face of this crisis, Porsche’s operating profit for 2024 has plunged by 23%, landing at €5.64 billion, with revenue barely holding steady at €40.08 billion. Instead of adapting to the future, Porsche is retreating to the past, with a new focus on petrol and hybrid models, allocating €800 million to develop new combustion engine cars. It’s a desperate gamble—one that risks further alienating an increasingly environmentally conscious market.
The company’s response to its challenges has been predictably corporate: the replacement of key executives and a wave of job cuts aimed at regaining momentum. Yet, even with these drastic measures, Porsche’s U.S. business faces further vulnerability from potential tariffs under President Trump’s trade policies, adding another layer of uncertainty to an already dire situation.
Despite the signs of corporate decay, Porsche clings to its long-term goal of achieving a 20% margin, a lofty aspiration that now seems increasingly disconnected from the harsh realities it faces. As its stock slips further, down by 60 cents to €38.99, the question remains: can a company so entrenched in the pursuit of profit at all costs truly adapt to the rapidly changing world around it?
