When the king starts to stumble and stagger, all of the courtiers starts to worry. That’s where the motor industry in Europe is right now. Porsche is struggling. Badly. The famed sports car maker, which since the early 2000s has really been more a maker of luxury SUVs, with some sports cars on the side, has seen its profits cut by two-thirds, customers desert its vaunted electric models, and a sense of chaos imbue its model plans.
This could be a foretaste of things to come across the industry. Peter Wells, professor of business and sustainability at the well-respected Centre for Automotive Industry Research in Cardiff University, he told The Irish Times: “My belief is that Porsche is, in a sense, a kind of pathfinder for what might happen more broadly in the car industry, and also indicative of a broader sense of unease, or a lack of clarity in the industry as to where it goes next.”
Car companies regularly run into trouble. Mighty General Motors, happily turning profits right now, was in the wake of the 2008 financial crash rescued by the US government and essentially nationalised. Jaguar Land Rover almost regularly lurches from boom to bust and back again. And Porsche itself was on the ropes within living memory, surviving the recession of the early 1990s only because crosstown compatriot Mercedes threw it a bone and got it to build the glorious V8-engined E500 sports saloon.
However, in the years since, guided by the Piech and Porsche families – yes, that Piech, as in Ferdinand Piech, once the all-powerful chairman of Volkswagen Group – Porsche became a byword for motoring success. Following the launch of its Cayenne SUV, and the smaller follow-up, the Macan, and with plaudits raining down on its proper sports cars, Porsche was making money more quickly than it could be counted.
RM Block
[ Leapmotor T03 review: New city car delivers on function, but is it fun?Opens in new window ]
Not only was it at several points in the past two decades the most profitable car company in the world, it was occasionally the richest, and even tried to buy a controlling interest in the vastly larger VW Group in 2008, a plan which backfired, and which ended up with VW buying out Porsche in 2012, eventually floating Porsche on the stock market in 2022 to no little financial gain.
Now, though? Porsche is deep in crisis mode. Just this week the German carmaker said its profit margin would likely shrink from a previous reduced estimate of 7 per cent to possibly as low as 2 per cent, a disastrous retraction from the peak of the brand’s success.
According to Porsche’s official figures, in the first six months of 2025 it generated a group sales revenue of €18.16 billion, which was €1 billion down on the same period in 2024. The operating profit amounted to €1.01 billion which is, no question, a lot of money but in the previous year it was three times larger – €3.06 billion.
“We continue to face significant challenges around the world. And this is not a storm that will pass. The world is changing dramatically – and, above all, differently to what was expected just a few years ago. Some of the strategic decisions made back then appear in a different light today. That is why we are fundamentally developing Porsche further,” said Oliver Blume, Porsche’s chair of the board. “Our completely revamped product range is very well received by our customers. We expect that we will begin to see positive economic momentum again from 2026 onwards.”
That revamping includes a rolling back on expansive electric vehicle plans, with the new Macan – originally launched as an EV-only model – expected to be re-engineered to accept a petrol hybrid system too, and the next-generation Boxster and Cayman sports cars, which had also been expected to be electric-only, following that same path.
“The aim of our strategic realignment is to strengthen our profitability and resilience,” said Dr Jochen Breckner, Porsche’s head of finance and IT. Breckner said Porsche would start negotiations with employee representatives on a second package of ‘measures’, which basically means significant job cuts and production reductions.
“In order to make Porsche fit for the future, we will discuss far-reaching approaches,” says Breckner. “These measures are expected to have a positive impact on earnings and cash flow in the coming years.”
Will these measures work? Is this just a fiduciary bump in the road for Porsche? Peter Wells is uncertain: “This has been building for a while now, and while there has been a history of growth, the problem with that which many don’t discuss is that the world is now much more full of Porsches than it used to be, and that generates a certain erosion of the exclusivity of the brand.”
More recently, Porsche – like so many – has fallen foul of Trump’s tariffs, and is reluctant to sidestep them by building cars in the United States, mindful of losing its image of German quality and engineering. At the same time, its market share in China – the world’s largest car market – has slipped badly, and for that, says Wells, Porsche really only has itself to blame. “People point to the improvement in quality of the Chinese brands, and definitely that’s the case. Again, the problem of ubiquity of the badge is now an issue, and the performance of some of those new Chinese challengers is really quite impressive.
“Again, something not talked about much is the backlash of the kind of geopolitical disputes we’ve seen is probably, I think, quite significant. Germany has been among the nations that’s been relatively vociferous about keeping the Chinese marques out. This is not a great message to hear if you’re living in China. It makes it difficult for people in China to buy the cars, even if they like them, because they’ve been all that social opprobrium. And in a country like China, that’s a really important factor, more so than it is here, I think.”
Ironically, during this time, the sales of Porsche’s most traditional model, the 911 sports car, have held up well, proving that there is a desire for the brand out there. Wells feels that the problem lies in Porsche relying too much on the sales of its other models – especially the Cayenne and Macan SUVs – which can easily be replaced by equivalent models from other brands in consumers’ minds.
“The sales of the 911 shows there’s clearly a diehard Porsche fan base happy to buy those cars,” Wells said. “The others, I feel, are more discretionary choices. The other products in the brand’s range, they’re more vulnerable. They don’t have that heritage. They don’t have quite that cachet of distinctiveness and uniqueness. This is where Porsche is a bit more exposed and a bit more vulnerable.”
There are other issues in the background, not least the corporate governance issue which leaves the shareholding of the Piech and Porsche families effectively in control, and individual and institutional investors without a sufficient voice at board level.
The journey towards electric power is also a potential tripwire for Porsche. The marque has shown with its Taycan and Macan electric models that it can make an EV handle, steer and drive like a true thoroughbred but, as Wells points out, the simplistic nature of electric motors erodes Porsche’s one-time unassailable prominence in engineering. Not everyone can make the 911’s famously vocal flat-six petrol engine, but any carmaker – especially a Chinese one – can buy an electric motor off the shelf which can give even a humble hatchback the acceleration of one of Porsche’s famed sports cars, if not necessarily its dynamic repertoire.
Can Porsche survive this, as it survived previous crises? Wells is unsure: “I think this is a really important pivot point for the business. They’ve bought themselves some time with this restructuring, but yes, this could be existential. Maybe in 10 years we look back at 2023 and say this was the high watermark. In some respects, I do believe the business had grown too big, too popular, so maybe what we need is a smaller Porsche in the future. They are at a moment where they have to redefine what their company is about.”
