Porsche Warns of Lower Sales, High Costs, and Trade Concerns
Challenging 2025 Earnings Ahead
BERLIN: Porsche warned on Wednesday that lower sales, high costs, and trade concerns would hurt 2025 earnings, even before a possible hike in U.S. tariffs on EU imports, making it the biggest percentage decliner on Europe’s benchmark stock index.
The carmaker is assessing how to pass on to consumers the likely surge in U.S. tariffs on European imports to 25% – from 2.5% now – without pressuring margins, implying vehicle prices may be raised to offset any drop in unit sales.
The U.S. Market
The U.S. is Porsche’s biggest market, making up 25% of unit sales in 2024, but like Volkswagen’s Audi, it has no U.S. manufacturing base and imports its cars from abroad.
Cost-Cutting Measures
Like its parent Volkswagen, Porsche is in the midst of a cost-cutting drive, shrinking its workforce by nearly 4,000 jobs and planning further cuts. Porsche had warned last month that profits would take a hit because of an 800-million-euro ($872.80 million) spend on new internal combustion engine and hybrid models.
Struggles in China
Porsche has fallen from grace since its stock market debut, struggling particularly in China, where sales plunged 28% in 2024 as consumers refrained from luxury spending amid a real estate crisis, and as EV-only Chinese startups won market share. China made up 18% of Porsche’s unit sales last year.
Plan to Revamp
Porsche is planning to improve its software and make greater effort to push its heritage design to win back customers, CEO Oliver Blume said. It will also cut costs further in its dealer network and own operations to protect margins despite lower volume sales, he said.
Financial Performance
Global operating profit fell 22.6% in 2024 to 5.6 billion euros, yielding a return on sales of 14.1% despite revenue remaining roughly on the previous year’s level, as renewing five out of six of its model lines weighed on earnings.
Conclusion
Porsche’s warning of lower sales, high costs, and trade concerns paints a challenging picture for the company’s 2025 earnings. The company’s struggles in China and the potential impact of U.S. tariffs on its business will be key areas to watch in the coming months.
Frequently Asked Questions
Q: What are the main factors affecting Porsche’s 2025 earnings?
A: Lower sales, high costs, and trade concerns, including the potential impact of U.S. tariffs on EU imports.
Q: How will Porsche pass on the likely surge in U.S. tariffs on European imports to consumers?
A: By raising vehicle prices to offset any drop in unit sales, without pressuring margins.
Q: What are the company’s plans to improve its performance in China?
A: Porsche is planning to improve its software and push its heritage design to win back customers, while cutting costs further in its dealer network and own operations to protect margins.