Porsche braces for lower sales era, seeks lifeline from luxury

BERLIN/FRANKFURT, Oct 7 (Reuters) - Porsche has acknowledged the challenging road ahead, with the Volkswagen brand revealing its plans for a turnaround at the company's capital markets day. Porsche aims to improve margins by focusing on luxury models, particularly the iconic 911 sports car and premium SUVs. The sports car manufacturer, along with Volkswagen, is undergoing major restructuring efforts to tackle weak demand and soaring costs.

During the company's development center in Weissach, CEO Michael Leiters will present a plan to reassure investors that a shift toward high-end vehicles will help Porsche regain its footing. The profit margin at Porsche plummeted to 1.1% in the previous year, a stark contrast to the double-digit margins that characterized the brand when Volkswagen went public four years ago under Oliver Blume, Leiters' predecessor.

Blume currently serves as CEO of Volkswagen, where he is actively working with unions to implement significant changes, including over 100,000 job cuts worldwide and the closure of up to four German plants.

To address these challenges, Porsche is implementing a "value over volume" strategy and preparing to reduce its workforce by a fifth by 2035. As the automotive industry grapples with the pressure from low-cost Chinese competitors, Leiters is reviving a focus on combustion-engine models, following costly mistakes in electric vehicle development under Blume's leadership. Additionally, the company seeks to cut development costs by enhancing platform-sharing with Audi, another Volkswagen brand.

Porsche's primary objective remains the strengthening of its sports car brand across all model lines and the introduction of new, highly desirable vehicles in premium segments. The company is currently concentrating on cost reduction measures to ensure long-term financial stability.