Porsche's earnings heavily depend on oil, incurring vast sums of money for freight shipments.
In the face of evolving market realities and customer needs, Porsche SE, the holding company of the Porsche and Piëch families, has announced a comprehensive realignment of its strategies. This shift comes as the luxury automaker grapples with a variety of challenges, including US import tariffs and a slump in sales, particularly in China and the US.
One of the most significant changes is Porsche's focus on combustion engines, with electric car plans being delayed. The company has also abandoned its plans for in-house battery production and is instead aiming to cater to the entire range of customer wishes with a mix of different powertrains.
The adjustments have come at a cost. Porsche expects to make less profit this year than previously anticipated, due to multi-billion-euro costs associated with its corporate restructuring. The total costs for this year are estimated at 3.1 billion euros, with Porsche itself bearing around 1.8 billion euros in additional special charges resulting from the extended production of combustion engine models and strategic adjustments within the company.
These costs have led to a significant decrease in Porsche's operating profit from January to June, which stood at 718 million euros, a 71 percent decrease from the previous year. In response, the company is negotiating a further savings program to offset these losses.
On the product front, Porsche is delaying the market launch of certain fully electric vehicles due to the delayed ramp-up of e-mobility. Meanwhile, the new large electric SUV, initially intended for the US market, will initially only be available as a combustion engine and plug-in hybrid.
Amidst these changes, Porsche's CEO, Oliver Blume, has emphasised the company's commitment to adapting to the new market realities. The automaker is developing new combustion models and successors for existing combustion engine vehicles such as the Panamera and Cayenne.
VW, Europe's largest automaker, is also feeling the pinch. The company expects to incur 5.1 billion euros in depreciation and follow-up costs this year. Its operating profit margin is now calculated at only two to three percent, down from previous expectations of five to seven percent.
Despite these challenges, Porsche remains optimistic about its future. The company expects its operating margin for the full year to be only slightly positive, at up to two percent. As the automotive industry continues to evolve, Porsche is positioning itself to meet the demands of the changing market, while maintaining its commitment to quality and performance.
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