Azernews.Az

By Alimat Aliyeva

German luxury car manufacturer Porsche has announced plans to cut 1,900 jobs by the end of the decade at its main plants in Stuttgart-Zuffenhausen and Weissach, Azernews reports.

The decision comes as a result of declining demand for electric vehicles, coupled with challenging geopolitical and economic conditions.

The staff reduction process began in 2024, when 1,500 fixed-term contracts expired. In addition, the company is not renewing 500 more temporary contracts, and the 1,900 job cuts will serve as an additional measure. As a result, Porsche's total workforce is expected to decrease by 15% by 2029.

Employees will be offered the option to voluntarily leave the company, with the choice of early retirement or severance pay. Additionally, Porsche will implement a "restrictive approach" to hiring new employees going forward.

Porsche’s significant investment in electric vehicles has not met expectations. Sales of its Taycan model in 2024 plummeted by 49%. In response, the company is reassessing its electric vehicle production targets and plans to increase the manufacturing of vehicles with internal combustion engines and hybrid models. This strategic shift is expected to cost Porsche 800 million euros.

In China, the world’s largest automotive market, Porsche’s total sales declined by 28% year-on-year. The company attributes this decrease to "the continuing difficult economic situation in the region." Overall, Porsche's global sales saw a more modest decline of 3%.

This move follows a similar trend across the automotive industry, as Volkswagen, Porsche’s parent company, also announced substantial staff cuts and the closure of three factories in Germany due to reduced demand in China and increased competition from inexpensive Chinese cars in European markets.

This shift in Porsche’s strategy signals a broader industry trend where even premium brands are adjusting their business models in response to fluctuating demand, the global economic downturn, and evolving consumer preferences. The company is navigating a complex landscape of supply chain disruptions, regulatory changes, and the ongoing transition toward electric mobility. Despite these challenges, Porsche’s strong brand reputation and commitment to innovation position it to adapt to the evolving automotive market in the long term.