Germany's Porsche to focus on luxury vehicles in sweeping new strategy

German luxury sports carmaker Porsche has unveiled a sweeping strategy to cut costs sharply and focus on its most profitable vehicles in the coming years.

The strategy, called "Sportwagenschmiede '35" - or "Sports Car Forge '35" - was presented on Wednesday at an event in Weissach, near Stuttgart, and outlines a three-phase plan.

"With our strategy, we are creating the conditions to make Porsche significantly more efficient, productive and profitable in three phases," said chief executive Michael Leiters, who has been in office since January. The immediate priority, he said, was to reduce costs and make Porsche financially more robust.

In the longer term, Leiters is aiming to trim the company down - a move considered difficult in the automotive industry, where economies of scale play a decisive role. 

The share of luxury cars is to be increased from around one-third to almost half of all vehicles sold. By 2030, this is intended to raise the average selling price of the most expensive 10,000 cars sold from €270,000 to €330,000. 

Plans include a larger and more expensive SUV than the Cayenne, and a two-door super sports car above the 911 is also expected to be added to the range.

Porsche has been under considerable pressure in recent times, struggling with falling sales figures, particularly in China, as well as weaker demand for electric models and US tariffs. 

It also incurred massive costs in reversing its strategy to extend its combustion engine line-up, which ate up the vast majority of the company's profit in 2025. Post-tax profit collapsed by 91.4% year-on-year to €310 million ($348 million).

Cost-cutting effort

Porsche said it plans to cut development costs for future model lines by up to 20%. Personnel costs in manufacturing are to fall by up to 30% in the medium term, while sales and distribution costs are to be reduced by 20%.

The company is targeting a reduction of around 10% in individual material costs. The number of model variants is also set to decrease.

Key pillars of the strategy are a focus on the core business and a leaner organization. Management positions are to be reduced by 40% in the medium term, Porsche said.

The carmaker is ultimately aiming for a significantly lower break-even point, which is to be reached at fewer than 200,000 units. 

Leiters said many parts of the company had previously been geared towards producing 350,000 cars, a consequence of the growth trajectory of recent years.

Earlier this year, management and employee representatives agreed on a cost-cutting programme providing for the elimination of a further 5,000 jobs in the Stuttgart region by 2035. In return, compulsory redundancies were ruled out until the end of 2035. 

Porsche has already implemented reduction programmes previously - including at its Leipzig plant and at subsidiaries. "Overall, the workforce in direct and indirect areas will be reduced by 25% in the medium term - with a strategic target of 30%," the company said.