In the Face of a 30% Profit Decline, Porsche Bets on Customisation

"Value over volume has always been the goal." This is how Porsche's CEO, Oliver Blume, began the annual results presentation of the German luxury sports car manufacturer, which is part of the Volkswagen Group. This division is one of the most profitable within the consortium, thanks to the generous profit margins it generates compared to its other mainstream brands.

However, 2024 has not been an easy year for the Volkswagen Group, which revealed a 30% drop in net profit in its annual results announced yesterday. Porsche confirmed this morning that the decline was of the same magnitude: a 30.3% decrease from the previous year, closing the fiscal year with 3.595 billion euros.

Unlike its parent company in Wolfsburg, the advantage for the Stuttgart-based manufacturer is that it can afford not to chase sales volume. Although the profit margin fell by nearly four percentage points, it remains the highest within the Volkswagen Group, at 14.1% of revenue.

This indicator is due to the pricing of its products, many of which have been customised through its Exclusive Manufaktur and Sonderwunsch divisions, where customers can choose virtually any detail. Given its high profitability, Porsche has decided to enhance these businesses to increase its capacity.

In fact, Porsche's turnover closed at nearly the same level as the previous year—one of the highest in its history—with 40.083 billion euros (-1.1%). The decline in net results is mainly due to a decrease in sales volume, which ended the year with 312,620 units, 6.3% less than the previous year.

Although electric vehicles accounted for 12.7% of its sales mix, the main decline was recorded by its only purely zero-emissions model, the Taycan, which saw its figures drop by 43.3%. The best-selling model was the Cayenne, with over 100,000 units, followed by the Macan with over 80,000, and the 911 in third place with over 50,000.

By region, the biggest hit was in China, which accounts for 18.3% of the manufacturer's deliveries and showed a 28.2% decline. The impact was such that CEO Oliver Blume stated, "The perception of our cars has changed compared to the last 10 years, and we have to assume that the market will likely not reach previous levels."

Nonetheless, the rest of the markets in which it operates recorded considerable growth and are at the highest point in the manufacturer's history, a positive development as it reduces dependence on a market like China.

Despite the slowdown in electric vehicle sales worldwide, for Porsche, this technology is the most efficient and promising for the future. At the press conference, they confirmed that the new Cayenne will feature an electric version, which will be manufactured in Bratislava.

However, the combustion engine will not disappear so soon, and they also confirmed that the 911 range will be expanded with a new high-performance version "that will make fans very happy."

Finally, Porsche's goal is to review its cost structure to lower the break-even point of its business, aiming to reduce it to around 250,000 vehicles, which is not a sales volume target. To achieve this, one of the measures they will take is the elimination of about 2,000 temporary jobs and another 1,900 permanent positions through early retirement plans.