Pakistan(National Times)- The carmaker was assessing how to pass on to consumers the cost of possible tariffs, expected at 25%, without pressuring margins, implying price hikes to offset any drop in unit sales. “For now, we are hoping there are solutions that will lead to a sensible tariff regime between regions,” CFO Jochen Breckner said on a press call after Porche’s annual results. 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. Sales dropped 3% last year and it expects even lower sales this year, with the depreciation of recent investments squeezing its margins to just 10-12%, without taking into account the impact of added tariffs. It also pared back its mid-term profit margin target – which Breckner expected to hit towards the end of this decade – to 15-17%, from 17-19%. Shares sank 4.5% in mid-morning trading, the biggest decliner in percentage terms on Germany’s DAX index and near their lowest point since listing in September 2022, as analysts doubted Porche would be able to offset the decline in sales volume with higher pricing.
STRUGGLES IN CHINA
Porsche has fallen from grace since its stock market debut, struggling in particular in China, where sales plunged 28% in 2024 as consumers, shaken by a real estate crisis, were reluctant to spend on luxury goods. The rise of cheaper lookalikes like Xiaomi’s SU7, often equipped with more sophisticated software, further dampened German carmakers’ prospects, with Audi, Mercedes-Benz and BMW also registering steep drops in China sales. 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. 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.
