Luxury carmaker Porsche bracing for more massive cuts

German luxury carmaker Porsche plans to intensify its cost-cutting programme and is demanding far-reaching concessions from its workforce, local media reported late on Wednesday.

The Volkswagen subsidiary has been hit hard by US tariffs and a collapse in the luxury market in China, while executing a costly U-turn on electric vehicles due to a lack of demand.

The new cuts focus on Porsche's main plant in Zuffenhausen, north of Stuttgart, and at its nearby development centre in Weissach, according to reports in the Stuttgarter Nachrichten and Stuttgarter Zeitung newspapers.

Measures under consideration include the outsourcing of entire operating units and vehicle projects.

The plans reportedly include scrapping one-off payments and employment anniversary bonuses. Pension provisions are also to be reduced. The plans include references to "job cuts among employees" and the "external relocation" of services, as well as a reduction in apprentices and guaranteed employment offers for trainees.

Other measures include "adjustments" to working-from-home arrangements and working hours, as well as an "increase in flexibility," the newspapers reported, based on documents they had seen.

A Porsche spokesman said the automotive industry faced immense challenges and that the carmaker's future depended on being competitive.

"To achieve this, we need to tackle every area," the spokesman said. "In view of the changed conditions, significant cost optimizations are absolutely essential."

He said that "confidential" discussions were ongoing with employee representatives regarding a new set of measures.

Employee demands

Porsche has signalled that it wants to discuss the reduction of personnel costs with employee representatives. Neither Porsche nor the company's works council gave details on the targeted volume of savings.

General works council chairman Ibrahim Aslan told the Stuttgarter Nachrichten and Stuttgarter Zeitung: "The general works council and IG Metall [trade union] are in talks with the management board on a future package to prepare Porsche and the workforce well for the future."

Formal negotiations had not yet started, he stressed.

Previously scheduled employee meetings are set for next week. The works council has taken a clear position: "We need job security at least until 2035 and expect a clear commitment to our German Porsche sites from the management board."

At present, around 23,000 employees at sites including Zuffenhausen and Weissach have been promised job security until mid-2030. After that, compulsory redundancies could be possible.

1,900 jobs to go by 2029

A first cost-cutting package was announced in February, axing 1,900 jobs by 2029. In July, outgoing chief executive Oliver Blume internally announced another round of savings.

Porsche is expecting a significant drop in profits this year, due to a strategic shift back towards building more combustion-engine cars. The cost of this restructuring amounts to €3.1 billion ($ 3.6 billion), Porsche said in mid-September.