Porsche is going through a difficult period. The Stuttgart-based brand has announced the elimination of 1,900 jobs in Germany to cut costs and stem an overall drop in profits. The company is contending with sluggish demand for electric vehicles, combined with an uncertain economic and geopolitical context.
Targeted job cuts in Stuttgart and Weissach
Job cuts will mainly affect the Zuffenhausen production site and the Weissach research and development centre. Porsche's stated objective is to reduce its workforce by 15 percent by 2029. However, the company assures that there will be no forced redundancies. Departures will be on a voluntary basis, including early retirement and severance packages.
A changing market and declining sales
Porsche, majority-owned by the Volkswagen Group, employs around 42,000 workers worldwide, including 23,650 in the Stuttgart region. The brand is feeling the full brunt of falling sales in China and stagnating growth in sales of EVs in Europe.
The automaker warned last week, on February 6th, that the expansion of its hybrid and combustion range would weigh on its results in 2024. Porsche expects its profit margin to fall to 14 percent, compared with an initial forecast of between 15 and 17 percent.
Internal consequences and strategic readjustments
In view of its financial underperformance, Porsche is also parting company with CFO Lutz Meschke and Sales Manager Detlev von Platen; those departures are part of a drive to improve the brand's image and profitability.
Already in 2024, Porsche had begun to reduce its workforce by not renewing 1,500 fixed-term contracts. To this is now added the termination of a further 500 contracts, a move deemed necessary to meet cost-cutting targets.
A turning point for Porsche and the Volkswagen Group
Porsche's announcement is part of a wider trend within the Volkswagen Group. Stagnant demand for electric vehicles is prompting several of the group's brands to reassess their production plans. Gas-engine models such as the Golf, T-Roc and Tiguan could be updated beyond 2030, as could the Audi A3.
Volkswagen say it remains committed to eliminating combustion engines in Europe by the early 2030s, while making it clear that it will adapt to market developments.
With this restructuring, Porsche is seeking to preserve its competitiveness in a fast-changing automotive sector, where the balance between combustion, hybrid and electric vehicles is more uncertain than ever.