Why Porsche is set to become a different company

Why Porsche is set to become a different company

Automotive News Europe — 2025-12-30

Automotive Industry

When Porsche CEO Oliver Blume said farewell to employees at a town-hall meeting in Stuttgart earlier this month, he appeared surprised by the upbeat mood. There were repeated applause and words of appreciation for the 57-year-old executive, who from January will focus on his role as CEO of Volkswagen Group.

His successor is Michael Leiters, who will join Porsche from McLaren at the start of the year.

Blume leaves behind an impressive record after a decade at the helm of Porsche. When he was promoted to CEO from head of production to CEO in 2015, Porsche delivered about 225,000 vehicles a year and employed roughly 25,000 people, according to its annual report. Last year, deliveries reached 310,000 units and the workforce had grown to about 42,000.

Operating margins averaged around 16 percent, allowing Porsche to pay employees generous bonuses, in some cases exceeding €9,000.

“The past 10 years represent the most successful decade in the company’s history — in products, motorsport and financially,” Blume said.

That picture has now shifted dramatically.

Weakness in China, combined with other challenges such as a faltering electric-vehicle strategy and U.S. tariffs, has led to an unprecedented downturn. In the third quarter, Blume and Chief Financial Officer Jochen Breckner reported a loss; for 2025, Porsche is likely to scrape by with little more than break-even results.

Radical shift in product strategy

In September, Porsche said it was walking back its ambitious EV plans after slow sales of its electric models including its new electric Macan.

A three-row electric SUV positions above the Cayenne will now arrive in the early 2030s as a combustion engine and plug-in hybrid model. A replacement for the gasoline Macan will now be developed. The Panamera and the Cayenne large SUV will retain their plug-in hybrid and combustion engine drivetrains when they are replaced in the next decade.

The strategy shift means Porsche was forced to make a €1.8 billion writedown.

To restore stable double-digit margins with lower volumes, Porsche will need to cut costs by several billion euros over the coming years.

Negotiations over what is known as “Structure Package II” have already begun. An initial list of potential measures was presented to the works council and subsequently leaked. Proposals include cutting bonuses and long-service awards, reducing white-collar staff, tightening home-office rules and eliminating additional rest breaks on the assembly line.

The list also mentions reducing the number of apprentices and trimming employer contributions to pension plans.

Opportunity to rebuild

These are familiar levers, similar to those used by Volkswagen in its own savings drive. Still, the newly formed works council, which represents employees, has sounded the alarm, warning that one in four jobs could be at risk — particularly at the Stuttgart-Zuffenhausen and Weissach sites, which together employ about 23,000 people.

Company executives paint a less dramatic picture. Internally, the focus is said to be less on outright job cuts and more on permanently lowering labor costs, which are seen as undermining the company’s competitiveness.

What already seems certain is that Porsche will emerge changed.

“There will have to be painful cuts,” Breckner has warned, saying the package must be far-reaching enough to restore competitiveness and enable investment in new models.

Blume has framed the crisis as an opportunity to rebuild. Longstanding privileges accumulated over years under the strong influence of the IG Metall union — benefits that many other industries can only envy — are now under scrutiny.

Customization could create jobs

How deep the eventual headcount reduction will be depends on several factors. While the combustion-engine Macan is almost certain to be built in Porsche’s plant in Leipzig, Germany, and the new seven-seat SUV above the Cayenne in VW’s plant in Bratislava, Slovakia, Porsche’s headquarters in Zuffenhausen could eventually require more staff.

That would depend in part on a planned expansion of its bespoke manufacturing operation. Porsche earns strong margins from customizing high-end models such as the 911 GT3. Former CFO Lutz Meschke, who left in February, had pushed to further tap this profit potential.

Because bespoke manufacturing relies heavily on manual labor, it would require additional workers — and more space, which is currently lacking at the main site.

That is why relocating production of the Taycan electric sedan has been discussed in the past. The model is now built on a single-shift basis. While production chief Albrecht Reimold dismissed those ideas at an industry conference in Berlin, it remains possible that the Taycan could be discontinued earlier than planned due to low volumes, freeing up space for the customization unit.

New CEO has chance to leave his mark

For now, the focus is likely to be on softer measures. Porsche will not lay off employees outright, as a job-security agreement runs through August 2030. Any reduction would therefore have to come through attrition, early-retirement schemes or severance programs.

As at Volkswagen, the outcome is likely to involve wage erosion and modest adjustments to working hours. If labor representatives agree to a package, works council chief Arslan could in return expect an extension of the job-security agreement to 2035.

According to Blume, negotiations are expected to conclude no earlier than the first quarter of 2026.

That timeline would give incoming CEO Michael Leiters some room to put his own stamp on the company — even if his flexibility is limited by existing product decisions. Leiters has already shown at McLaren that he can steer a company out of troubled waters and back into the black.