Decline in Porsche's earnings exceeds 70% - Decline in Porsche's profits exceeds 70%
In the first half of 2025, luxury car manufacturer Porsche has experienced a significant drop in profit, primarily due to the impact of US tariffs, the collapse of China's luxury car market, and difficulties in transitioning to electric vehicles (e-mobility).
The trade agreement between the EU and the USA has resulted in permanently increased import tariffs into the United States for Porsche, denting profit margins and increasing costs for the brand when exporting vehicles to the American market. Despite record sales growth there, these tariffs have taken a toll on Porsche's bottom line.
In China, the luxury car market's collapse significantly reduced demand, affecting Porsche's global deliveries and revenues. The struggles in the Chinese market have been a significant factor in the brand's profit decline.
Porsche is also grappling with the slow uptake of electric vehicles (EVs) globally. The sales of its flagship Taycan EV fell sharply, while newer EV models such as the Macan EV have not compensated adequately for this decline. This underperformance in EV sales is partly due to the high final prices of these models, which exceed those of competitors, leading to potential customer resistance.
These pressures have forced Porsche to admit its traditional business model is no longer viable. CEO Oliver Blume acknowledged that the company's historic high profit margins are unsustainable under current conditions, prompting a strategic realignment focused on cost reduction, product portfolio flexibility, and scaling back, including planned job cuts. Porsche expects to see positive momentum only from 2026 onwards as these changes take effect.
The brand is also implementing another cost-cutting program and expects its revenue for 2025 to be between 37 to 38 billion euros. However, the article does not provide information on Porsche's future financial projections beyond 2026.
Approximately 1,900 jobs are to be cut in the Stuttgart region by 2029 as part of the company's cost-cutting measures. The problems faced by Porsche include the markets in China, the USA, and e-mobility, although the article does not provide specific details on the issues in e-mobility.
In summary, Porsche's profit slump is caused by the combined effects of US tariffs increasing costs, weakened demand in China’s luxury market, and difficulties in profitably transitioning to e-mobility, all pushing the company to overhaul its longstanding business model to adapt to these global and technological shifts.
The trade agreement between the EU and the USA has led to permanently increased import tariffs for Porsche when exporting vehicles to the American market, necessitating a strategic realignment focused on cost reduction, product portfolio flexibility, and job cuts (employment policy).
The struggling luxury car market in China has significantly reduced demand for Porsche's vehicles, impacting global deliveries and revenues, prompting the company to reevaluate its business model (community policy). The financial sector (finance) will closely monitor Porsche's future financial projections, particularly as it navigates challenges in the electric vehicle industry (industry).
