Job cuts in the XL sector on the horizon: Porsche announces a significant cost-cutting scheme
Porsche, the renowned luxury car manufacturer, has announced a drastic cost-cutting program that will impact both its workforce and business model. The plan, which is ongoing through 2029, aims to reduce costs by €1.3 billion.
The cost-cutting program will see approximately 3,900 positions being reduced by 2029, achieved primarily through natural attrition, voluntary exits, and contract expirations. Porsche has emphasised that there will be no compulsory redundancies until 2030, relying on voluntary measures to reduce headcount.
In the second half of 2025, negotiations with employee representatives and labor leaders will take place to develop a second structural savings package aimed at securing the company's long-term performance. These talks will be confidential, respectful, and collaborative, focusing on further cost savings beyond the initially announced job cuts.
Porsche is also making strategic shifts in its product portfolio, particularly in the Chinese market where battery-electric vehicle (BEV) deliveries dropped 42% year-on-year in Q1 2025. The company has reduced its model range there and is prioritizing higher-margin internal combustion engine (ICE) models and plug-in hybrids, such as the Cayenne and Macan, due to soft EV demand and increasing local competition.
Despite committing to full electrification by 2030, Porsche currently retains ICE models, which still make up 73% of its 2024 sales, to maintain profitability in the face of regulatory and market challenges. The company is also investing €800 million in 2025 towards software, battery technology, and operational efficiency to support long-term competitiveness while trimming expenses elsewhere.
These measures are designed to stabilize cash flow and preserve flexibility, acknowledging short-term earnings pressure with a forecast 2025 operating return on sales of 15-17%. The challenges motivating these actions include the slowdown in China (a market representing 20% of Porsche's global sales), increasing tariffs and trade volatility in the US, and the evolving luxury EV market landscape worldwide.
CEO Oliver Blume announced the cost-cutting program in an internal letter. However, there is currently no official timetable for communication with the workforce about the second austerity package at Porsche. The exact implications for Porsche employees in the second austerity package remain unclear for now, but signs are pointing to significant changes.
It is worth noting that the collective agreements will not be touched in the second austerity package, and dismissals due to operational reasons are taboo under the current agreement until 2030 at Porsche. The company is relying on the cooperation of employees and labor representatives to manage the transition.
The first austerity package at Porsche led to the expiration of around 2,000 temporary contracts and the announcement of the elimination of 1,900 jobs. The current program is the second in a short period of time, and while it is expected to be challenging, Porsche is hopeful that it will secure its long-term performance and continued success in the ever-changing automotive industry.
Sources: [1] Autocar (2025) - Porsche's cost-cutting plan: What you need to know [2] Reuters (2025) - Porsche to cut 3,900 jobs as part of cost-cutting plan [3] BBC News (2025) - Porsche announces major cost-cutting measures
- Porsche, in an effort to secure its long-term performance and success in the automotive industry, has announced a second austerity package that will involve further cost savings beyond the initially announced job cuts, with negotiations scheduled for the second half of 2025.
- In addition to its workforce adjustments, Porsche is making strategic shifts in its product portfolio, investing €800 million in 2025 towards software, battery technology, and operational efficiency, while retaining ICE models to maintain profitability in the face of regulatory and market challenges.
- Despite the challenging period of job reductions, Porsche is optimistic that these measures, including maintaining cooperation with employees and labor representatives, will stabilize cash flow and preserve flexibility, ensuring the company's continued growth and competitiveness in the transportation and automotive business sectors.
