Porsche is scrapping plans to build up to 400,000 cars every year. As Porsche’s production plans surged, its workforce grew rapidly. Declining sales across the US and China are hurting its profit margin. With its sales in decline, Porsche’s new chief executive, Michael Leiters, is reportedly pushing for the company to downsize, dramatically reducing its production plans, cutting its workforce, and shrinking its executive board. Under the leadership of former boss Oliver Blume, Porsche had been seeking to boost sales, aiming to sell between 350,000 and 400,000 vehicles per year. As production increased, so did Porsche’s workforce. However, poor sales of its EVs, as well as an overall downturn in its business across the US and China, led to a drop in Porsche’s profit margin to just over 1% last year. Read: Porsche’s New CEO Might Bury The Cayman, Boxster EVs Before They Even Launch Now under the helm of Leiters, who previously served as McLaren’s CEO, Porsche recently announced it is dissolving the Car-IT division, reducing the number of divisions from eight to seven. It’s possible Porsche’s executive board could also be cut from seven to six members, as it was when Porsche was led by Matthias Müller. Big Production Cuts Porsche CEO Michael Leiters More important are Porsche’s production plans. Last year, it sold roughly 280,000 vehicles, down more than 30,000 from the previous year. The downtrend has continued this year, with sales dropping 15 percent through the first quarter. With this in mind, Handelsblatt understands Leiters wants to reorganize the company so it can be profitable while producing roughly 200,000 vehicles annually. By the end of the decade, it will reportedly aim to achieve an operating margin between 10 percent and 15 percent. Leiters is in negotiations with the German works council to cut costs, which will result in job losses. It’s unclear how many workers could be let go, but many of the losses could be focused on Porsche’s development center in Weissach. This facility is currently home to around 5,200 staff, and an insider suggests a quarter of these jobs are at risk. Porsche sales chief Matthias Becker could also lose his job, having been partly blamed for the company’s sales decline in China. Becker was also notably absent at the recent Beijing Auto Show. The car manufacturer also has overcapacity issues to deal with. It may seek to overcome this by merging its production and procurement divisions.
