Porsche wants to cut costs

Author: Duran Sarikaya
Date: 19.03.2019

Entry into e-mobility burdens carmakers

Porsche has now come under financial pressure as a result of the high costs associated with the entry into electric mobility. In order to maintain the record figures in 2018 and the return targets, CEO Oliver Blume and CFO Lutz Meschke have ordered a results program.

A total of six billion euros shall be saved by 2025 – two billion euros every year. This is expected to be achieved through savings and new revenue sources. “We must now take decisive countermeasures,” said Meschke.

In the past fiscal year, Porsche achieved sales of around 25.8 billion euros – an increase of almost ten percent. However, the operating result was not so successful, so that the return was only 16.6 percent. This means that the sports car manufacturer has reached its target of 15 percent, but is also a full percent below the 2017 figure. Overall, a profit of 3.1 billion euros was achieved in 2018, an increase of three percent compared to 2017.

WLTP costs a lot of money

Due to the change in electric mobility, Porsche is facing the same difficulties as other manufacturers. The entry and search for new digital business areas cost billions and the conversion to the new WLTP emissions test standard is also a financial burden.

By 2022, Porsche will invest six billion euros in electric mobility. The Taycan is the first e-sports car and will be launched on the market in autumn. The expansion of the plant in Leipzig where the E version of the Macan SUV will soon be produced was recently started.

The number of employees continues to rise. The sports car manufacturer currently employs around 32,000 people. The number has doubled since 2011. Since e-cars consume around 10,000 euros per vehicle in production, costs in this area have also risen.

Reduce costs and find sources of money

In order to avoid collecting the money from the customer again, the costs in other sectors must be reduced. For example, digital methods shall be used in the development of prototypes, making them faster and cheaper. Blume wants to continue to reduce the number of models and slow down personnel growth in the long term.

Furthermore, new sources of funding are searched. Blume and Meschke are planning digital lifestyle services in cars and mobile phones. These can also be used by people who do not own a Porsche.

Currently, 800 million euros per year are invested in the development of such offers, which are expected to generate a lot: “In the medium term, we want our digital businesses to generate double-digit percentage revenues,” says Meschke.