KondorCars via YouTube Add Jalopnik on Google: Google Discover There was a time in the not-too-distant past when Porsche was the gold standard of profitability for the Volkswagen Auto Group and the automotive industry at large, but those days are long behind us. Now, the German sports car maker could be considered The Group's biggest problem, and it's creating all sorts of headaches and road bumps for CEO Oliver Blume's restructuring plans. We're not even four years removed from Porsche's record-setting initial public offering, and it has already become the epitome of VW's broader issues — especially when you look at its utter collapse in China and various missteps when it comes to the transition to electrification, according to Reuters. At the end of last week, Volkswagen issued its latest profit warning, bringing with it a $6.9 billion write-down on its 75% stake in Porsche just weeks after agreeing to cut 50,000 jobs as part of the company's biggest restructuring plan in its history. Things are bleak, to say the least. Volkswagen blames the write-downs on weaker financial expectations for Porsche, which had one of the largest IPOs in recent history when it debuted on the Frankfurt Stock Exchange in 2022. At the time, we said it could be worth up to $85 billion. Tough times djgis/Shutterstock They're probably right, too. Previously, Porsche's margins were some of the highest in the industry, but they've since slid below VW's entry-level brand, Škoda, Reuters reports. Of course, the two companies make money in very different ways. Škoda is all about building as many cars as possible, and Porsche is leaning further and further into the idea of "value over volume," according to industry analyst Ferdinand Dudenhoeffer. That means that the company is getting "smaller and smaller," so even if it has good profit margins on a car, the profits themselves won't exactly be stellar. Still, an internal memo from CEO Michael Leiters that the outlet viewed insisted that the company was sticking by its medium-term target for margins between 10 and 15%. Leiters also reiterated that there's no new forecast for the automaker for this year or in the medium-term. The thing is, treading water might be hard to actually accomplish in the current landscape. Porsche is pretty much throwing in the towel in China and tariffs in the U.S. are putting a ton of pressure on sales volume and profits. Sales have been falling in North America, the Middle East, Africa and India, as well. Even if it were to return to double-digit margins and focus on its most profitable high-end models, it might not be enough to help Porsche generate cash, and the Volkswagen Group needs Porsche to generate cash if it wants to make it through this nasty restructuring effort. "The days of [Porsche] being a profit driver are over," one industry analyst told Reuters.
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