Porsche to cut models in bid to boost credentials

Porsche is doubling down on exclusivity to generate more value, with plans to cut model variants, expand into higher-margin segments and increase revenue from highly customized cars.

"Our ultimate goal is to further strengthen our unique sports car brand — across all model lines and with new, highly desirable models in particularly high-margin segments," said Michael Leiters, chairman of the executive board of Porsche.

He made the remarks when the German sports carmaker revealed its new "Sportwagenschmiede '35"strategy at a Capital Markets Day on Wednesday.

It aims to lower Porsche's break-even point to fewer than 200,000 vehicles while continuing to follow its "Value over Volume" principle.

The company said the target is based on a "very conservative forecast for China", underscoring the challenging outlook in one of its most important markets.

Porsche is targeting a medium-term group operating return on sales of 10-15 percent and an automotive net cash flow margin of 9-12 percent.

Its long-term targets are a 15 percent operating return on sales and a 12 percent automotive net cash flow margin.

Rather than pursuing growth through higher sales volumes, Porsche is emphasizing the value and exclusivity of its products.

It plans to reduce the number of model variants by about 20 percent in the medium term, while expecting sales volume per variant to increase by about 30 percent.

The company also aims to increase the share of D- and E-segment models in its overall portfolio by about 45 percent.

At the top end of the portfolio, Porsche expects the average selling price of its flagship models to rise by about 20 percent in the medium term, supported by greater product substance and individualization options.

The company is also targeting a sixfold increase in sales from its highly customized Sonderwunsch program.

Porsche will group its activities in Performance, Exclusiveness and Heritage under the name "Home of Sports Cars".

Its Performance business will be strengthened through an increase in its stake in Manthey Racing to 67 percent, with plans to expand the joint offering of performance kits and track experiences to limited-production vehicle concepts.

The push upmarket will also be supported by new halo products. Porsche is developing a mid-engined supercar platform for a model positioned above the 911.

It is also exploring an SUV in the D segment above the Cayenne and plans to strengthen the 911 lineup with emotive derivatives.

The company plans to launch at least one brand-defining new product every year through 2030.

At the same time, Porsche is maintaining a three-pronged powertrain strategy covering battery-electric, plug-in hybrid and internal-combustion-engine vehicles.

The all-electric 718 Boxster and Cayman are expected to support sales in their first year of production in 2028.

A new B-segment SUV with ICE and plug-in hybrid powertrains is also scheduled for 2028. It is expected to make a significant contribution to sales and profitability from 2029, said the carmaker.

Porsche is also investing in brand-defining ICE and plug-in hybrid powertrains as well as next-generation battery technology.

The emphasis on higher value is being accompanied by a substantial restructuring of its cost base.

The company aims to reduce development costs for future model lines by up to 20 percent, production personnel costs by up to 30 percent, and sales and distribution costs by 20 percent.

Material costs for new vehicle projects are expected to fall by about 10 percent compared with previous plans.

Porsche plans to reduce management positions by 40 percent and its overall workforce by 25 percent in the medium term, with a longer-term target of 30 percent.

The company is also focusing on its core business, including through the sale of stakes in Rimac and Bugatti Rimac, the planned sale of its MHP consulting subsidiary, and the planned closure of the development and production activities of Cellforce Group, Porsche eBike Performance and Cetitec.

Porsche is expected to make greater use of compatibility within the Volkswagen Group by more cooperation with Audi through the use of the Premium Platform Electric and Premium Platform Combustion architectures, while retaining brand-specific technologies and features.

In the medium term, Porsche expects group sales of 41-45 billion euros ($46-50 billion) with revenue growth expected to outpace volume growth and earnings growth to exceed revenue growth.

"Our strategy will lay the groundwork to make Porsche significantly more efficient, productive and profitable," Leiters said.

lifusheng@chinadaily.com.cn