Latest news with #OliverBlume
Yahoo
a day ago
- Automotive
- Yahoo
Porsche CEO seeks fresh cost cuts, warning business model ‘no longer works' in post-Trump, new China world
Porsche CEO Oliver Blume warned the nearly 37,000-strong German workforce he will negotiate with its labor union in the coming months over further cost cuts. Already, it plans to eliminate more than a tenth of its staff by 2029 to position the brand for a world where it sells only 250,000 cars annually, rather than the 311,000 it achieved last year. A combination of plunging demand in China and effects from Trump's economic agenda are hitting the export-reliant luxury sports car maker hard. Once the envy of the entire German auto industry, Porsche is drifting deeper and deeper into its biggest crisis in decades. In a letter to employees, the manufacturer of the iconic 911 sports car informed its 36,700 domestic workforce it would enter negotiations with the IG Metall trade union over a second package of cost cuts designed to protect profit margins. The latest reductions are expected to come on top of the already 3,900 job cuts planned in Germany through 2029, designed to shrink the company's cost base to reflect a world where the brand sells only 250,000 cars annually instead of the 311,000 achieved last year. Chief executive Oliver Blume, who splits his time running both Porsche and its majority owner Volkswagen Group, warned staff that they would have to gird themselves for difficult times to come. 'Our business model that sustained us over many decades no longer is functioning today in its current form. Business conditions have deteriorated massively within a short period of time,' Blume warned his employees in comments obtained by Fortune. They were first reported on Friday by the German media. He cited a pair of related contributing factors, starting with China, where first-half vehicle sales plunged 28% to their lowest level in eleven years amid a brutal price war, particularly for EVs. The brand had once sold 95,700 cars there in 2021, an all-time record—at its current pace, it would be lucky to get half that result this year. This bled into another issue: a slowdown in the adoption rate of its EVs. Now it no longer expects an 80% share of its volumes to come from fully-electric cars by 2030 as realistic, preferring not to give a forecast any longer. This, however, heavily impacts Porsche and its supplier base, given the investments already made in new products like the electric Macan. 'On the one hand we need EVs to fulfil regional CO2 regulations,' Blume wrote, 'but on the other the profit margins are far below those of our combustion engine cars.' Trump a double disaster for Porsche — weak dollar, high tariffs He didn't stop there, though: without actually mentioning Trump by name, the Porsche CEO said the U.S. poses its third major problem. Demand there ironically has never been better, and yet it is suffering under the combined weight of the current administration's economic policies. These have sparked a sharp decline in the U.S. dollar versus the euro that, together with its punitive regime of tariffs, darkens the outlook for the export-reliant carmaker. 'Despite a delivery record in the first year, we are under enormous financial pressure,' he admitted, referring to the U.S. market. The result is a company whose operating margin is currently forecast by management to shrink to between 6.5% and 8.5% from 14.1% in 2024. Even during the dark days of the 2008-09 global financial crisis, Porsche's sports car business could still maintain an operating return on sales in the double digits. 'A further profit warning with Q2 results seems likely,' wrote UBS, estimating Porsche's operating margin could be guided down to 5%-7% given current guidance only includes the effects from U.S. tariffs for the months of April and May. Once the world's third most valuable carmaker after Tesla and Toyota, Porsche shares lost 29% so far this year. Anyone who poured money into Porsche's September 2022 public offering of stock—Europe's largest in over a decade—is currently sitting on losses short of 50%. At the same time that Porsche is facing its biggest crisis in decades, the company is also in the process of overhauling half its senior management team with four new C-suite executives in charge of finances, sales & marketing, personnel, and procurement. The company confirmed the tenor of the letter, but declined to comment further. This story was originally featured on
Yahoo
2 days ago
- Automotive
- Yahoo
Porsche to intensify cost-cutting measures as tariffs bite
Porsche is reportedly set to intensify its cost-cutting efforts as the luxury car manufacturer faces headwinds from declining sales in China and the impact of US import tariffs. According to a memo to staff from CEO Oliver Blume, which was obtained by Bloomberg, the company is set to commence discussions on further cost-saving measures in the latter half of the year. Blume said: 'Our business model, which has served us well for many decades, no longer works in its current form.' The company is contending with 'lower-than-expected' demand for electric vehicles (EVs) and sluggish luxury car sales in China, which is said to be a competitive market for battery-powered vehicles. In the US, Porsche's largest market, the company is feeling the pressure of President Donald Trump's trade policies, which are affecting profit margins. Earlier in the month, the company cautioned about the challenging sales outlook for the year, citing a slowdown in the US and ongoing weakness in China. The proposed cuts, which will be negotiated with labour leaders, aim to improve the company's profitability over the coming years. The automaker has set a medium-term operating margin target of 15% to 17%, up from 8.6% in the first quarter (Q1). Following the example of its parent company, Volkswagen, Porsche is seeking to reduce production costs in Germany, where labour and energy expenses are said to be significant. Volkswagen reached an agreement with unions late 2024 to cut production capacity and minimise its workforce by 35,000 over the next five years. In April 2025, Porsche revised its financial outlook for this year, citing a challenging Q1 influenced by a downturn in China, rising supply chain expenses, and the US tariff impact on the automotive industry. The manufacturer reported a decrease in group sales revenue for the quarter, ending 31 March, to €8.86bn ($10.01bn) from €9.01bn in the same period last year. The 1.7% decline in sales revenue was primarily due to lower vehicle sales, despite positive pricing and customisation effects. Navigate the shifting tariff landscape with real-time data and market-leading analysis. Request a free demo for GlobalData's Strategic Intelligence . "Porsche to intensify cost-cutting measures as tariffs bite" was originally created and published by Just Auto, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
The Irish Sun
4 days ago
- Automotive
- The Irish Sun
Iconic supercar brand ‘bracing for more cost cutting' weeks after halting all sales of EVs in the UK
AN ICONIC supercar brand is reportedly bracing for more cost cutting after halting all sales of its electric motors in the UK. The luxury carmaker is seeking ways to offset declining sales in China and the escalating cost of US tariffs. Advertisement 2 Porsche is bracing for more cost cutting measures Credit: Getty 2 The luxury carmaker seeks ways to offset declining sales in China and the escalating cost of US tariffs Credit: Getty Porsche CEO, Oliver Blume, has initiated negotiations on another round of cost-cutting measures. Blume had already announced additional savings in March while presenting the firm's 2024 results. An excerpt of a letter sent to the company's leadership said: "In the second half of 2025, employer and employee representatives will negotiate a second structural package to secure the company's long-term performance." Blume wrote: "Our business model, which has served us well for many decades, no longer works in its current form." Advertisement Read more Motors news Details about what the possible savings measures might look like weren't included in the letter. Porsche has been particularly struggling with low sales in China. But the carmaker is also facing difficulties in the US where import duties of 27.5% on motors have been in place since April. The company doesn't have production facilities in the US, importing its cars exclusively from Europe instead. Advertisement Most read in Motors Breaking Exclusive At the beginning of the year, Porsche had announced that it would cut 1,900 of around 40,000 jobs by 2029. This came after 2,000 temporary employees did not have their contracts renewed. Inside Dua Lipa's one-off 184mph Porsche 911 GT3 RS set to raise £100,000s for charity It's a fall from grace from the motor company which, at its 2022 stock market debut, was valued higher than parent company Volkswagen AG. Experts have linked the company's struggles to its overly aggressive and inflexible electrification strategy. Advertisement Porsche has had a goal of being 80 per cent electric worldwide by 2030 But the brand dramatically halted all sales of one of its electric vehicles in the UK in May. The company mysteriously told its retailers to stop selling a specific batch of the electric sports car. Several main Porsche dealers were asked to remove a selection of electric Taycan models from sale. Advertisement It followed a request from the Driver and Vehicle Standards Agency (DVSA) which manages motor recalls in the UK. The problem related to a previous recall issued in November by the DVSA which said it could pose a fire risk. that month too over the risk of the wheels falling off while driving. It issued a notice on three of its most popular models including the iconic Advertisement Owners were urged to "stop driving immediately".
Scottish Sun
4 days ago
- Automotive
- Scottish Sun
Iconic supercar brand ‘bracing for more cost cutting' weeks after halting all sales of EVs in the UK
It comes amid the company's recent struggles NEW ROUTE Iconic supercar brand 'bracing for more cost cutting' weeks after halting all sales of EVs in the UK AN ICONIC supercar brand is reportedly bracing for more cost cutting after halting all sales of its electric motors in the UK. The luxury carmaker is seeking ways to offset declining sales in China and the escalating cost of US tariffs. 2 Porsche is bracing for more cost cutting measures Credit: Getty 2 The luxury carmaker seeks ways to offset declining sales in China and the escalating cost of US tariffs Credit: Getty Porsche CEO, Oliver Blume, has initiated negotiations on another round of cost-cutting measures. Blume had already announced additional savings in March while presenting the firm's 2024 results. An excerpt of a letter sent to the company's leadership said: "In the second half of 2025, employer and employee representatives will negotiate a second structural package to secure the company's long-term performance." Blume wrote: "Our business model, which has served us well for many decades, no longer works in its current form." Details about what the possible savings measures might look like weren't included in the letter. Porsche has been particularly struggling with low sales in China. But the carmaker is also facing difficulties in the US where import duties of 27.5% on motors have been in place since April. The company doesn't have production facilities in the US, importing its cars exclusively from Europe instead. At the beginning of the year, Porsche had announced that it would cut 1,900 of around 40,000 jobs by 2029. This came after 2,000 temporary employees did not have their contracts renewed. Inside Dua Lipa's one-off 184mph Porsche 911 GT3 RS set to raise £100,000s for charity It's a fall from grace from the motor company which, at its 2022 stock market debut, was valued higher than parent company Volkswagen AG. Experts have linked the company's struggles to its overly aggressive and inflexible electrification strategy. Porsche has had a goal of being 80 per cent electric worldwide by 2030 But the brand dramatically halted all sales of one of its electric vehicles in the UK in May. The company mysteriously told its retailers to stop selling a specific batch of the electric sports car. Several main Porsche dealers were asked to remove a selection of electric Taycan models from sale. It followed a request from the Driver and Vehicle Standards Agency (DVSA) which manages motor recalls in the UK. The problem related to a previous recall issued in November by the DVSA which said it could pose a fire risk. Porsche recalled 1,000 high end luxury cars that month too over the risk of the wheels falling off while driving. It issued a notice on three of its most popular models including the iconic 911. Owners were urged to "stop driving immediately".
The Sun
4 days ago
- Automotive
- The Sun
Iconic supercar brand ‘bracing for more cost cutting' weeks after halting all sales of EVs in the UK
AN ICONIC supercar brand is reportedly bracing for more cost cutting after halting all sales of its electric motors in the UK. The luxury carmaker is seeking ways to offset declining sales in China and the escalating cost of US tariffs. 2 2 Porsche CEO, Oliver Blume, has initiated negotiations on another round of cost-cutting measures. Blume had already announced additional savings in March while presenting the firm's 2024 results. An excerpt of a letter sent to the company's leadership said: "In the second half of 2025, employer and employee representatives will negotiate a second structural package to secure the company's long-term performance." Blume wrote: "Our business model, which has served us well for many decades, no longer works in its current form." Details about what the possible savings measures might look like weren't included in the letter. Porsche has been particularly struggling with low sales in China. But the carmaker is also facing difficulties in the US where import duties of 27.5% on motors have been in place since April. The company doesn't have production facilities in the US, importing its cars exclusively from Europe instead. At the beginning of the year, Porsche had announced that it would cut 1,900 of around 40,000 jobs by 2029. This came after 2,000 temporary employees did not have their contracts renewed. Inside Dua Lipa's one-off 184mph Porsche 911 GT3 RS set to raise £100,000s for charity It's a fall from grace from the motor company which, at its 2022 stock market debut, was valued higher than parent company Volkswagen AG. Experts have linked the company's struggles to its overly aggressive and inflexible electrification strategy. Porsche has had a goal of being 80 per cent electric worldwide by 2030 But the brand dramatically halted all sales of one of its electric vehicles in the UK in May. The company mysteriously told its retailers to stop selling a specific batch of the electric sports car. Several main Porsche dealers were asked to remove a selection of electric Taycan models from sale. It followed a request from the Driver and Vehicle Standards Agency (DVSA) which manages motor recalls in the UK. The problem related to a previous recall issued in November by the DVSA which said it could pose a fire risk. that month too over the risk of the wheels falling off while driving. It issued a notice on three of its most popular models including the iconic 911. Owners were urged to "stop driving immediately".
