German luxury carmaker Porsche on Monday announced plans to cut a total of 9,000 jobs by 2035. The move comes as the company struggles with falling sales in China, slower-than-expected growth in electric vehicle (EV) demand and rising competition from Chinese automakers.
The latest agreement, reached after months of talks between Porsche’s management and employee representatives, adds 5,000 more job cuts to measures already announced earlier this year, reported Reuters. The company said it would avoid compulsory layoffs by relying on natural attrition, voluntary retirement and other employee exit schemes.
The restructuring forms part of a broader effort by Porsche and its parent company, Volkswagen Group, to improve efficiency as Europe’s auto industry faces growing pressure from changing market conditions and global competition.
Why is Porsche reducing its workforce?
Porsche’s decision follows a sharp decline in business in China, once one of the company’s most profitable markets. At the same time, demand for premium electric vehicles has not grown as quickly as many carmakers expected, forcing manufacturers to rethink production and investment plans, reported Reuters.
Earlier this year, new Porsche CEO Michael Leiters announced an initial package of 3,900 job reductions, along with another 500 positions linked to the closure of company subsidiaries. The latest agreement adds another 5,000 positions, taking the total planned reduction to 9,000 jobs by 2035, reported Reuters.
The company said the additional cuts would not involve compulsory redundancies. Instead, it plans to reduce its workforce through retirements, employees leaving voluntarily and other agreed measures.
Alongside the workforce reduction, Porsche also announced plans to invest €2.1 billion ($2.39 billion) in its main production facility in Stuttgart-Zuffenhausen and its research and development centre in Weissach, reported Reuters. The investment aims to strengthen manufacturing and technology capabilities even as the company reduces costs elsewhere.
Porsche and its works council also agreed to keep company sites open until the end of 2035, giving employees greater certainty about the future of its manufacturing operations.
How does this fit into Volkswagen’s wider strategy?
Porsche is not the only German automaker cutting costs. Other premium manufacturers, including Mercedes-Benz and BMW, have also announced efficiency measures as they adapt to the industry’s transition toward electric vehicles, reported Reuters.
Chinese carmakers have expanded rapidly in both domestic and international markets, increasing competition for established European brands. At the same time, manufacturers have had to deal with higher tariffs and rising production costs, putting additional pressure on profits.
Volkswagen CEO Oliver Blume, who previously led both Volkswagen and Porsche before ending the dual leadership arrangement, has pushed for deeper cost reductions across the group.
According to the company, Volkswagen aims to double planned job cuts across its businesses to 100,000 positions as part of efforts to remain competitive, reported Reuters. Blume has also warned that four Volkswagen Group factories, including one operated by premium brand Audi, could face closure after 2030 if market conditions do not improve.