Porsche Adjusts Product Strategy, Prioritizing Combustion Engines Amid Shifting Market Demands

Porsche AG is implementing significant adjustments to its product strategy, a move aimed at navigating the evolving automotive landscape. The company's leadership has decided to extend the availability of combustion engine models and introduce new ones, while also rescheduling the development of certain all-electric platforms. This strategic pivot reflects a response to current market conditions and changing customer preferences.

Key Takeaways

• New SUV series above Cayenne to launch initially with combustion and plug-in hybrid options.

• Existing combustion engine models to remain available longer, with new generations planned.

• Development of a new all-electric platform for the 2030s is rescheduled.

• Porsche anticipates short-term financial burdens due to these strategic shifts.

Strategic Realignment of Product Portfolio

Porsche AG is undertaking a comprehensive realignment of its product strategy, with key decisions made by its Executive Board and Supervisory Board. The company plans to specifically supplement its product range with brand-defining vehicle models featuring combustion engines. This includes the new SUV series positioned above the Cayenne, which was initially intended to be all-electric. Due to market conditions, this series will now be offered exclusively as a combustion engine and plug-in hybrid model at its market launch.

Furthermore, existing combustion engine models will continue to be available for a longer period, with new generations of successor models being integrated into the product cycle plan. The development of a planned new platform for electric vehicles, originally slated for the 2030s, will be rescheduled and technologically redesigned in coordination with other Volkswagen Group brands. This decision is a direct response to the slower-than-anticipated growth in demand for exclusive battery-electric vehicles.

Financial Implications and Future Outlook

These strategic adjustments are expected to support Porsche's financial results in the medium and long term. However, they will lead to considerable additional depreciation and provisions in the short term. The company anticipates significant burdens due to changed external factors, including US import tariffs, a decline in the Chinese luxury market, and the slowdown in electric mobility adoption. Porsche is now targeting a medium-term operating return on sales in the double-digit range, potentially reaching up to 15%, which aligns with the lower end of its previous forecast.

The rescheduling of the new electric vehicle platform is projected to burden the operating profit in the 2025 financial year by up to 1.8 billion euros. Consequently, Porsche has adjusted its forecast for the 2025 financial year. The company now expects sales revenue between 37 and 38 billion euros, with a slightly positive return on sales of up to 2%. The automotive EBITDA margin is projected to be between 10.5% and 12.5%, and the automotive BEV share is expected to be between 20% and 22%.

Dividend Proposal and Long-Term Vision

Despite the financial adjustments, the Executive Board intends to propose a dividend for the 2025 financial year that would significantly exceed the communicated medium-term dividend policy in terms of percentage payout ratio, although the actual amount is expected to be lower than the previous year. Porsche emphasizes that these strategic investments, while impacting short-term financial results, are essential for sharpening brand identity, enhancing product desirability, and increasing company resilience in a volatile market environment. Overall, Porsche anticipates extraordinary expenses of around 3.1 billion euros for the 2025 financial year related to this strategic realignment.