Porsche in restructuring crisis. Falling sales force new drastic job cuts
Zuffenhausen – Turbulent times for one of the world's most iconic car brands. Porsche is undergoing a drastic restructuring and cost-cutting phase, against the backdrop of declining sales and an electrification strategy that has not yielded the expected results.
After previously announcing 3,900 job cuts, the German manufacturer is considering eliminating another 5,000 jobs in the coming years. If the new plan is approved, the total number of layoffs could reach around 9,000 employees, bringing the company's workforce below the 40,000 mark (compared to 41,780 employees last year).
Drastic measures on the table of the Supervisory Board
According to German publication Automobilwoche, the proposal was recently presented to the supervisory board by Porsche CEO Michael Leiters.
Where will these cuts hit hardest?
- Targeted departments: Most vacancies are expected in the Research and Development (R&D) areas.
- Main objective: Simplifying the product range and reducing the technological complexity of new models.
- Group synergies: To optimize expenses, Porsche has already announced a much closer collaboration with Audi for the development of future platforms and the sharing of enormous development costs.
The reasons behind the crisis: EV strategy and sales decline
The decision to massively reduce the staffing scheme does not come out of the blue, but is the direct result of below-expected financial performance and the extremely difficult market context:
- Sales collapse: Last year, Porsche delivered 279,449 cars. However, in the first six months of this year, the brand's sales fell by 15%, signaling a sharp cooling in demand in key markets (especially China and Europe).
- The complicated bet on electrification: The transition to electric vehicles (EVs) has proven that the Zuffenhausen brand's initial strategy was not the most effective. Global demand for expensive electric cars has slowed more than the major manufacturers had predicted.
- Abandoning popular combustion models: Cutting production of highly profitable internal combustion engine versions — such as the combustion version of the popular Macan SUV (discontinued in the European market due to cybersecurity regulations and the transition to EVs) — has left a sizable hole in the company's revenue.
What's next?
If the board gives the green light to Michael Leiters' proposed plan, Porsche will enter a new era of "weight loss", trying to become more agile, cheaper to operate and more closely linked to the resources of the parent group. It remains to be seen whether the streamlining of R&D will not affect in the long term the very performance DNA that made the brand famous.
