Porsche Says Its Painful Restructuring Plan Is Starting To Work

Storm clouds have gathered above Porsche, which has seen its profit collapse almost entirely in 2025 amid massive EV strategy writedowns, plunging sales in China, and cost pressures in Germany.

In a bid to address the profitability issue, the luxury car manufacturer has announced another round of layoffs in Germany involving 5,000 people by 2035, bringing the total planned reductions to 9,000 positions. This means that ultimately, nearly one in five Porsche employees will lose their jobs.

Porsche officially confirmed the decision after its executive board held discussions with the company’s general works council, IG Metall trade union, and the Südwestmetall employers’ association. The move to axe an additional 5,000 jobs is part of the company’s “Future Package” plan, which forms part of wider “Sportwagenschmiede 35” strategy that will be fully detailed at a Capital Markets Day in October.

The Job Cuts Will Be Carried Out in a “Socially Responsible” Manner

Now, it’s important to point out that the job cuts will be carried out without forced dismissals and in a “socially responsible” manner. Porsche said it will instead use natural staff turnover, demographic changes, an expanded partial retirement scheme, and voluntary severance agreements to achieve the required job cuts.

In addition to the job reductions, Porsche has also made a series of changes regarding compensation and bonuses. For example, a total of 3.5% of the current collectively agreed pay increase and future pay increases will be deferred until 2035, with senior and top management to waive an equivalent contribution from increases in basic remuneration in 2027 and 2028. In addition, Christmas bonuses will drop from 100% to 60% of a monthly salary and work from home days will be reduced from 12 to a maximum of 8 days a month.

Job and compensation cuts aside, there are also positive decisions for employees of its main factory in Zuffenhausen and the Weissach R&D site, which will see investments totaling €2.1 billion ($2.4 billion) by 2035 to secure the future of these iconic factories.

“This is intended to ensure, for example, that two-door sports cars continue to roll off the production line in Zuffenhausen in the long term, that the volume of the Sonderwunsch programme can be expanded and that development activities for all model lines continue to be concentrated in Weissach,” Porsche said. To help finance these investments, Porsche said it will implement significant reductions in personnel costs and more flexible and productive work.

The Restructuring Is Beginning to Show Results

Porsche’s half-year results released on July 29 show that the restructuring measures have enabled the company to confirm its 2026 guidance despite multiple challenges.

The new package of job cuts is expected to hit second-half results by between €300 million ($342 million) and €400 million ($456 million), with a similar impact expected next year, finance chief Jochen Breckner said. “But we are convinced that this expenditure will soon pay off,” the executive added.

CEO Michael Leiters said Porsche had worked intensively on the restructuring strategy since he assumed the job at the start of the year but warned that a lot of work remains to be done.

“The Future Package is a key building block in making Porsche more competitive, more efficient and more resilient in the long term,” Leiters said. “I am therefore confident that we can achieve our goals. However, we still have a lot of work ahead of us to position Porsche robustly for the challenging future.”

Porsche AG’s operating profit grew by 34% to €1.35 billion ($1.53 billion) in the first half of the year, thanks in part to the shift toward high-end, margin-boosting cars. While revenue fell by 5% to €17.23 billion ($19.64 billion), the company posted an operating return on sales in the first half of 7.8%, above the targeted range of 5.5% to 7.5% for the full year.