Volkswagen wants further cuts at Porsche as existing savings plan falls short
Porsche’s former role as Volkswagen’s cash machine is rapidly eroding. Volkswagen’s internal documents contain a proposal to reduce Porsche’s workforce by a further roughly 4,100 employees. This would be in addition to the nearly 9,000 job cuts already factored in by the sports-car maker. The reason is stark: Volkswagen sees a savings gap of around €700 million in Porsche’s overheads.
No decision has yet been made on the 4,100 job cuts
Volkswagen supervisory board documents obtained by Handelsblatt refer to a reduction of approximately 4,100 employees at Porsche, within the “Sport Luxury” group of brands. Volkswagen is factoring in these cuts in addition to existing agreements.
There is an important distinction here between a plan and a decision. Volkswagen cannot simply impose a reduction in Porsche AG’s workforce by decree from Wolfsburg. Porsche is an independently managed listed company, and Volkswagen can recommend such measures rather than impose them unilaterally. Volkswagen and Porsche have not publicly commented on the plan to cut 4,100 jobs.
It would therefore not be accurate to say at present that Porsche is cutting a further 4,100 jobs. Volkswagen wants Porsche to reduce costs by an amount equivalent to roughly that number of employees.
Porsche is already cutting nearly 9,000 jobs
The new figure becomes far more serious when viewed alongside the existing savings programme.
Porsche had previously decided to reduce its workforce by around 4,000. In July this year, the company’s management and employee representatives agreed on the elimination of a further 5,000 jobs. The cuts agreed so far therefore affect around 9,000 positions and are expected to be implemented by 2035.
According to Handelsblatt, the 4,100 sought by Volkswagen would be added to that figure rather than included in it. If Porsche were to implement the proposal in full, the total of existing and new cuts would reach approximately 13,100 jobs.
For the Stuttgart-based manufacturer, that would be a very large change. Even before the new proposal, the agreed programme meant the loss of roughly one in five jobs.
Volkswagen found a €700 million hole in Porsche’s plan
The job figure did not appear out of nowhere in Volkswagen’s documents. According to the group’s calculations, Porsche needs to improve its earnings by €3.8 billion by the end of the decade.
Porsche is expected to find €1.8 billion in savings from overheads, but only around €1.1 billion of this is currently covered by specific measures. That leaves a shortfall of roughly €700 million. This cost category includes administration and personnel, among other items.
This explains why Volkswagen is once again looking at headcount. Porsche’s problem is no longer only a question of which models to build or how quickly to transition to electric vehicles. In the group’s assessment, the company’s fixed-cost structure is too burdensome for its current sales volume.
China has turned from a gold mine into a problem for Porsche
Porsche came under pressure as several adverse trends converged. Sales in China have fallen sharply, US tariffs are eroding profitability, and revising its electric-vehicle strategy is costing billions. Reuters links Porsche’s current restructuring pressure specifically to the decline in Chinese sales and the costly reversal of its electric strategy.
The situation in China is the most uncomfortable. For years, Porsche was able to sell Cayenne, Macan, Panamera and 911 models there with very high margins. Now European premium manufacturers are competing with local brands whose electric vehicles are advancing more rapidly and often cost less.
Porsche’s problem differs from that of Volkswagen’s core brand. Volkswagen has to contend with enormous production capacity and pricing pressure in the mass market. Porsche built its business model around much lower volumes but exceptionally high profit per car. When that margin falls, the impact quickly spreads across the entire Volkswagen Group.
Porsche forced Volkswagen to cut its profit forecast
The severity of the situation is illustrated by Volkswagen’s recent profit warning. The group lowered its expected operating profit margin for 2026 from the previous 4.0–5.5% to no more than 1%. According to Reuters, the change was largely caused by writedowns in the value of Porsche-related assets.
This makes Porsche’s troubles a problem for Volkswagen as a whole.
Just a few years ago, the logic was the reverse. Porsche’s high profitability helped the group finance huge investments in electric vehicles, software and new platforms. Now Volkswagen itself must find ways to reduce the cost base of its sports-car maker.
Porsche CEO Michael Leiters’ task is therefore not merely to replace a few unsuccessful models. He must restore the company’s profitability at a time when the old formula for the Chinese market no longer works and the electrification strategy must be revised.
Europe’s old automotive model faces a painful price tag
The Porsche case starkly demonstrates how quickly the balance of power in Europe’s automotive industry is changing. High prices and a strong brand no longer automatically guarantee the kind of profitability to which German premium manufacturers had become accustomed.
Chinese competition now affects both Volkswagen’s mass-market models and Porsche’s price segment. At the same time, the development of electric vehicles, software, battery technology and new platforms costs billions of euros before the first car reaches a customer.
One further factor makes the situation uncomfortable for Europe. The automotive industry cannot cut costs indefinitely simply by reducing its workforce, because at the same time it must invest in new technology to keep pace with competitors from China and the US.
