Latest news with #Breckner
Yahoo
29-04-2025
- Automotive
- Yahoo
Porsche Has No Plans for U.S. Production, Finance Chief Says, in Spite of Trump Tariffs
Since it has no production facilities on U.S. soil, Porsche is particularly vulnerable to President Donald Trump's recently imposed tariffs on foreign-made automobiles. Speculation that Porsche may move some production Stateside to mitigate the impact appears to have been incorrect, however, as according to a report by Reuters, Porsche finance chief Jochen Breckner has stated the brand has no plans to build vehicles in the U.S. According to Reuters, Breckner made the pronouncement during a call with analysts to discuss falling profit margins in the first quarter of 2025, during which time Porsche saw them sink from 14.2% to 8.6% in the face of tariffs, weak sales in China and a slower-than-expected transition to electric cars. Breckner said that, even though other automakers in the VW Group has assembly facilities in the U.S., the comparatively small number of vehicles Porsche produces would mean even joining forces with fellow Group siblings would be impractical. As a result of the current chaotic climate, Porsche has been forced to revise its 2025 sales outlook. The previous revenue estimate of between €39 billion ($44.5 billion) and €40 billion ($45.6 billion) has been shifted to between €37 billion ($42.1 billion) and €38 billion ($43.3 billion). The carmaker also revised downward its profit margin forecast from 10%–12% percent to 6.5%–8.5%. The company is fighting a three-headed monster right now: sales in China are dwindling, with Q1 sales down by 42% in that country, with Chinese EV buyers are favoring domestic brands; consumers around the world are not adopting EVs as quickly as Porsche had anticipated; and, finally, the tariffs are hitting the automaker in the wallet. Breckner stated that the Trump tariffs will cost the company at least €100 million ($114 million) in April and May, according to Reuters, while adding that Porsche has elected to not raise prices yet. However, the company will not hold the line forever; he said prices will eventually be increased if the tariffs remain in place. With many 2026 model year Porsche prices already seeing a sizable price increase prior to the impact of the new levies, even a tariff increase of just a couple percentage points will mean thousands of dollars to the end consumer. 'We see a very special and challenging situation," Breckner said, according to Reuters. With potential price increases looming, Porsche buyers may also soon be faced with making difficult decisions. You Might Also Like You Need a Torque Wrench in Your Toolbox Tested: Best Car Interior Cleaners The Man Who Signs Every Car Sign in to access your portfolio
Business Recorder
29-04-2025
- Automotive
- Business Recorder
Porsche cuts outlook as US tariffs, China weakness hit in first quarter
FRANKFURT: Porsche's margins plunged in the first quarter, the sportscar maker said on Tuesday, forcing it to cut its 2025 outlook due to weakness in main market China, rising supply chain costs and US tariffs that are disrupting the global car industry. The US tariffs are expected to raise car prices by thousands of dollars, reducing demand and hurting job growth, rattling an automobile industry already struggling with a slowing transition to electric vehicles. Porsche finance chief Jochen Breckner said that tariffs resulted in a hit of at least 100 million euros ($114 million) in April and May, but added that the carmaker, which has no local US production, had so far taken no counter-measures. This may change when there is further clarity around final tariff levels, Breckner said, adding 'we will of course have to react accordingly in the market and pass on at least a proportion of the tariffs to end customers'. Breckner said localising production in the United States made no sense at the moment due to Porsche's low vehicle sales figures, even if the group, which is majority-owned by Volkswagen, were to team up with another VW brand. Shares in Porsche were down 5%, as of 0751 GMT. In April, Porsche, one of the carmakers most exposed to tariffs, said it had shipped added inventory to the United States to get ahead of tariffs and kept prices constant for orders made in March. The group late on Monday said the tariffs, in place since April at 25%, weighed on its business in April and May, and it warned that its adjusted outlook does not factor in the future effects of tariffs. China woes Porsche said it now expects revenue of between 37 billion euros and 38 billion euros ($42.17 billion-$43.31 billion) in 2025, down from its previous forecast of 39 billion to 40 billion euros. Its profit margin is forecast to drop to 6.5-8.5%, down from a previous forecast of 10-12%. According to the average of analyst estimates in an LSEG poll, Porsche's operating margin is seen at 9.7% on revenue of 38.8 billion euros. Porsche's 2024 China sales fall by 28% Its first-quarter operating margin fell to 8.6%, below the 9.8% analyst average estimate in an LSEG poll. 'We believe … the firm is taking the opportunity to kitchen sink estimates,' JP Morgan analysts said, adding it still expected Porsche to be able to get back to double-digit margins in 2026. The car maker, which at its stock market debut in 2022 had a higher valuation than its parent company, Volkswagen AG, has fallen from grace since, struggling in particular with low sales in China, its top market, where first-quarter sales dropped 42%. Bill Russo, CEO of Shanghai-based advisory firm Automobility, said Chinese customers of electric cars had been drawn to domestic brands because of their improved technological offering. 'No foreign company believed that the Chinese could somehow build equity that was superior to the foreign brands, especially the Europeans,' he said. Porsche also said it would no longer pursue plans to expand high-performance battery production at its Cellforce subsidiary, and it cited a decline in demand in China for all-electric luxury cars.
Yahoo
12-03-2025
- Automotive
- Yahoo
Porsche stock slides on profit forecast; company may 'pass' tariff costs on to customers
Porsche stock is sliding after the company cut a key profit target — and revealed it may pass down tariff costs to its well-to-do customers. Porsche said expects a global operating return on sales (or ROS, a measure of profit margin) in a range of 10% to 12% in 2025, down from 14.1% in 2024 — and sharply down from 18% ROS in 2023. Issues with China, rising costs, and a product revamp would continue to weigh on results. The German luxury automaker said it is targeting a medium-term (two- to five-year timespan) ROS of 15%-17%, a drop compared to the 17%-19% it had previously forecast. The company still aims for a long-term (more than five years) ROS of 'more than 20%,' CFO Jochen Breckner said in a statement. Porsche stock was down 3% on Wednesday. Why the margin woes? Porsche cited a deteriorating situation in China, where new competition and deep price cuts have hurt revenue in the region. Escalating trade wars — namely President Trump's threat of tariffs on European imports — are also weighing on the company's financials. Regarding tariffs, Breckner said the company's well-off customers may bear the brunt. "When the subject [of tariffs] becomes concrete, we will assess which price options there are to pass on to consumers," Breckner said in a news conference following the release of results, per Reuters. "We have a very, very strong brand, a great customer base, a loyal customer base, and great product. So in the first place, we would look into additional pricing" to preserve margins. Aside from tariff escalation, which the company is not modeling yet in its profit forecast, the company is in the midst of a cost-cutting initiative as it responds to a difficult environment in China and rising costs for materials and parts. The company said it would slash 1,900 jobs by 2029 and that another 2,000 jobs would be eliminated through the expiration of contracts in the same time period. Another problem: Porsche bet heavily on EVs and has seen that business tail off recently. Porsche CEO Oliver Blume said a 'refreshed' product offering was coming, with the company relying on a mix of drivetrains like gas engines and plug-in hybrids, as well as battery EVs. 'In view of the changed circumstances, we have adjusted our product strategy in all segments,' Blume said in a statement. For example, in addition to the updated 911 sports car launched for the 2025 model year, Porsche will debut an all-new Cayenne SUV — with multiple drivetrains — later this year. The product adjustment comes as Porsche posted sales of 40.08 billion euros ($43.66 billion) in revenue in 2024, down 1.1%, with operating profit dipping to 5.64 billion euros ($6.14 billion), down a whopping 22.6% compared to a year ago. CFRA's Garrett Nelson, meanwhile, reiterated his Sell rating on the stock. "Global uncertainties are expected to persist with the new U.S. administration's tariff policies, which could further adversely impact management's guidance, in which 28% of 2024 vehicle deliveries come from North America,' Nelson wrote in a note to clients. Nelson added, 'Amid challenging market conditions, we do not discount further cuts to guidance over the rest of the year." Pras Subramanian is a reporter for Yahoo Finance. You can follow him on X and on Instagram. Sign in to access your portfolio
