To streamline, Porsche negotiates second cost-cutting package with union. Speaking to Frankfurter Allgemeine Sonntagszeitung last weekend, CEO Michael Leiters expects quick results.
"We want agreement with workers before July factory summer break. Porsche staff need clarity," Leiters said.
Earlier, Porsche announced 1,900 more job cuts, after cutting 2,000 temporary contract workers in 2025. CEO Leiters aims to produce fewer than 280,000 cars sold last year.
"Porsche must make money with fewer cars," he declared. Former McLaren CEO Michael Leiters took Porsche top job in January, as brand faces challenges.
Since 2022 listing, share price halved. Last year, operating profit plunged 98% to 90 million euros (about 105 million USD). Operating margin dropped to 0.3% from 14.5% in 2024.
Workers on Porsche assembly line in Bratislava in 2024. Photo: Reuters
Porsche recorded 3.1 billion USD loss from poorly timed EV transition. Investors lose patience. Ingo Speich, representing major shareholder Deka Investment, wants clear CEO strategy soon. "We expect focus on cost cuts. This is area he can control," he said.
Past six months, Leiters sought to streamline via staff cuts and union cost talks. Seeing lower-than-expected EV demand, company plans to develop plug-in hybrids and combustion engine cars until at least 2030s, alongside pure EVs.
Also, per Reuters, Porsche could leverage rare 2025 bright spot: strong demand for legendary combustion-engine 911, restoring "emotional connection" between brand and fans.
Similarly, BMW and union prepare for talks after profit warning last week and plans to accelerate efficiency measures. BMW shares hit near six-year low on news. Year-to-date, stock down over 37%.
"For now, we seek viable solutions through responsible dialogue with workers," BMW Works Council spokesperson said.
Third consecutive year BMW issued profit warning, partly due to falling China sales and rising costs from Iran conflict. Also, tariffs—including US import tariffs and EU anti-subsidy duties on China-made EVs—cut BMW Q1 auto margin by 1.25 percentage points, as Mini brand EVs are made in China.
First quarter, BMW recorded 31 billion euros revenue, 1.65 billion euros net profit, down 8.15% and 22.65% year-on-year. BMW CEO Milan Nedeljkovic pledged more savings, planning up to 5% global workforce cut by late 2026. With current staff under 155,000, this means about 7,700 jobs could go.
Workers in BMW plant in Munich, Germany on December 5, 2023. Photo: Reuters
Immediate recovery outlook for German luxury carmakers remains challenging. Business environment shows no improvement, while competition from BYD and Xiaomi intensifies. According to Reuters, Porsche, BMW, and Audi face pressure as Chinese automakers expand lead in domestic market—world's largest—and penetrate deeper into Europe.
Also, Middle East instability and global economic slowdown risk make recovery harder. "Even wealthy individuals may become more cautious with non-essential spending, adding pressure on Porsche," Metzler investment bank analyst Pal Skirta said.
BMW forecasts slight decline in business results this year, with core operating margin between 4% and 6%, down from 5.3% in 2025.
Long term, experts remain optimistic. Frank Schwope, automotive consultant and lecturer at Cologne University of Applied Sciences (FHM Köln), believes luxury makers like Porsche will recover faster than mass-market brands like Renault or Fiat. "Porsche customers usually stay loyal to brand, while Opel buyers can easily switch to Chinese brand," he said.
Automotive analyst Ferdinand Pieper rates BMW in favorable position, thanks to flexible technology strategy. Company did not bet entirely on EVs, and completed most development costs for next-generation models. BMW also increased production at Spartanburg plant in US, reducing impact of Trump tariffs.
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