The average price of Porsche's top-end models is expected to rise to more than €330,000 by the end of the decade.
Porsche plans to raise prices of its top-end sports cars by an average of 20 per cent as part of a strategy to improve profitability, while also adding a new model positioned above the long-running 911 flagship. The German carmaker outlined the strategy at an investor presentation on Wednesday, with a focus on selling fewer, higher-priced cars equipped with more exclusive features, Bloomberg has reported.
The move comes as Porsche deals with the impact of costly electrification decisions and a sharp decline in sales in China.
Focus On Higher-Margin, More Exclusive Cars
Chief Executive Officer Michael Leiters was quoted as saying that the turnaround would take time, with the company currently focused on cutting costs. Over the medium term, Porsche plans to increase the prices of its most exclusive models while offering buyers more bespoke materials and performance features.
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The average price of Porsche's top-end models is expected to rise to more than €330,000 ($370,134) by the end of the decade, from around €270,000 this year, according to the company's presentation.
“The top priority is to further strengthen our unique sports-car brand across the entire lineup, with new, desirable models in particularly high-margin segments,” Leiters said during a press conference in Stuttgart, according to Bloomberg.
New Porsche Model To Sit Above 911
Porsche also detailed plans for a vehicle range positioned above the 911, marking a return to the supercar segment for the first time since the limited-production 918 Spyder debuted in 2013.
The new model is planned around a mid-engine architecture, a layout that can improve weight distribution and handling. The expansion would bring Porsche closer to Ferrari NV's range of sports cars and grand tourers.
Manthey Stake To Rise To 67%
Porsche plans to increase its stake in Manthey, the Nürburgring-based motorsport specialist, to 67 per cent from 51 per cent. Manthey makes road-legal track upgrades, including suspension, brakes, lightweight wheels and aerodynamic components.
Porsche expects a broader range of joint offerings to provide another route to increase sales through specialised products rather than higher volumes.
Cost Cutting Ahead
The restructuring is also intended to prepare Porsche for permanent US tariffs and a China business that is unlikely to return to its previous size. Changes to the model range will follow substantial cost reductions, including previously agreed plans to cut the workforce by more than a fifth and management positions by 40 per cent.
“At the moment, the main focus is on reducing costs and making the company more financially robust,” Leiters said. Porsche must first “put our own house in order” before moving further upmarket, he said.
Porsche, one of Volkswagen AG's key profit centres, is seeking to rebuild the earnings strength that previously made it one of Europe's most profitable carmakers.
The company is targeting an operating margin of 10 per cent to 15 per cent over the medium term, with a longer-term target of 15 per cent. Restructuring costs, tariffs and weaker demand pushed the margin down to 1.1 per cent last year.
The downturn has resulted in multibillion-euro writedowns at Volkswagen and reduced dividends to Porsche SE, the investment vehicle controlled by the Porsche-Piëch billionaire family.
Porsche expects cash generation to recover sharply and is targeting an automotive net cash-flow margin of as much as 12 per cent. The company has already seen some improvement, with its operating margin reaching 7.8 per cent in the first half of this year.
Lower Break-Even Volume Targeted
Porsche delivered just under 280,000 vehicles last year and is also shutting or selling non-core businesses, including its stake in a venture that owns supercar maker Bugatti. Agreements reached with employee representatives earlier this year are expected to reduce the company's workforce by 9,000 positions.
The automaker also aims to bring its annual break-even volume down to around 200,000 vehicles through cost reductions, including a roughly 20 per cent cut in development spending, according to presentations released ahead of its capital markets day.
Leiters declined to disclose Porsche's current break-even point, but said the company is equipped for higher production, with peak output reaching roughly 330,000 vehicles in 2023.
The restructuring comes as other major European carmakers are also adjusting their operations and profitability targets. Volkswagen is planning to cut 100,000 positions, primarily in Germany, while Mercedes-Benz Group AG and BMW AG are recalibrating their profit ambitions.
