Automotive industry: Porsche: Profits fall by 40 percent

Porsche has once again had to revise its outlook for the current year downward. The sports car manufacturer also presented weak figures for the first quarter of 2025. Operating profit fell by more than 40 percent from January to March compared to the same period last year, to 760 million euros. Revenue shrank slightly by 1.7 percent to just under 8.9 billion euros. The return on sales slipped to 8.6 percent, compared to 14.2 percent a year ago. Several factors are weighing on Porsche's results: the US government's tariffs, weak business in China, and high supply chain costs. A change in strategy for battery production and job cuts are also causing high short-term costs.

Porsche has revised its forecast for the full year downward. The Stuttgart-based company says the return on sales is now expected to be between 6.5 and 8.5 percent, down from 10 to 12 percent. The automaker originally aimed for a 20 percent profit margin in the medium term. The Volkswagen subsidiary now estimates sales revenue at between 37 and 38 billion euros. In the worst case scenario, the two lower figures in the forecast range would result in an operating profit of just 2.4 billion euros – down from 5.6 billion euros and a margin of 14 percent in the previous year.

Part of the current profit slump stems from US import tariffs. Porsche has to import all vehicles into its largest sales region, North America, due to a lack of its own production; since April, tariffs have increased their prices in the US by 25 percent. Since customers were promised stable prices for April and May, Porsche has to absorb the tariff costs. According to a report by the trade publication Automotive News , which refers to Porsche dealers, the automaker is currently holding back deliveries to the US after Porsche initially increased its inventory before the tariffs came into effect. The company is thus playing for time, awaiting a negotiated solution to the tariff dispute. Porsche could not be immediately reached for comment.

According to Porsche, further effects of the US tariffs have not yet been taken into account in the new annual forecast. "Currently, no reliable assessment of the impact for the fiscal year is possible." If the US government does not reach an amicable agreement with the EU and the tariffs remain in place, Porsche's forecast could be jeopardized again.

In China alone, sales fell by 42 percent in the first quarter of 2025. The company writes that it is pursuing a "value-oriented supply management" approach. This means that the Swabian company would rather sacrifice sales in China than lower prices.

Porsche has also decided to restructure its battery activities because electric cars are gaining traction more slowly than expected. The company originally planned to manufacture battery cells itself. However, the company will not establish its battery subsidiary, Cellforce Group, independently after all. Whether Porsche will seek a partner or sell its high-performance cell business remains to be seen. After all, Porsche is also incurring the costs of its investment in battery manufacturer Varta.

Overall, Porsche estimated the cost of investments in new combustion and hybrid models, battery cells and corporate restructuring at 1.3 billion euros, of which 200 million euros have already been spent.