Stuttgart: Porsche could face more than 4,000 additional job cuts as parent company Volkswagen pushes ahead with a major restructuring programme amid falling sales in China, pressure on profitability and changes to its electric vehicle strategy.

According to German business daily Handelsblatt, documents linked to a recent Volkswagen supervisory board agreement propose reducing Porsche’s workforce by about 4,100 employees. The reported cuts would come on top of job reductions already agreed between Porsche management and labour representatives.

The reported proposal is part of Volkswagen’s broader effort to reduce costs across the group as the German automaker faces weaker financial expectations and restructuring challenges.

Porsche may cut another 4,100 jobs

Handelsblatt reported that the proposed reduction of about 4,100 employees at Porsche is intended to address an overhead shortfall of around £700 million, equivalent to about $803.8 million based on the figure cited in the report.

The newspaper said the proposed cuts would be in addition to existing agreements.

The report does not mean that the additional 4,100 positions have already been eliminated. It refers to plans contained in documents connected with Volkswagen’s restructuring process.

Volkswagen and Porsche did not comment on the reported plans when approached by Reuters.

Earlier Porsche job cuts already agreed

Porsche has already agreed to substantial workforce reductions.

In July, Porsche management and labour representatives agreed to an additional 5,000 job cuts, following 4,000 reductions that had been determined earlier.

Together, those existing agreements amount to around 9,000 job cuts. According to the Reuters report, the previously agreed reductions would affect roughly one in five employees at the Stuttgart-based sports car manufacturer by 2035.

The newly reported proposal for another 4,100 positions would therefore represent an additional workforce reduction beyond those agreements.

However, Volkswagen’s role has limits. As Porsche’s parent company, it can recommend measures, but it cannot simply mandate all such workforce decisions at Porsche, according to the report.

China sales add pressure on Porsche

Porsche has been dealing with a significant decline in sales in China, one of the world’s largest luxury car markets.

The company’s performance in the Chinese market has become an important factor in its wider turnaround efforts. The pressure comes as luxury carmakers face changing consumer preferences, intense competition and the rapid development of electric vehicles in the country.

The sales weakness has also contributed to pressure on Porsche’s management to develop a strategy to restore growth and profitability.

Porsche CEO Michael Leiters is facing the task of developing that comeback strategy, according to the Reuters report.

EV strategy reversal adds to restructuring

Porsche’s electric vehicle strategy has also become a significant part of the company’s current restructuring challenge.

The automaker had invested heavily in electrification, but weaker-than-expected demand for some electric vehicles has forced it to reassess aspects of its strategy.

The company has been adjusting its product plans and investment priorities as it balances electric models with continued demand for combustion-engine and hybrid vehicles.

The changes come at a time when automakers globally are dealing with the high cost of developing electric vehicles, changing regulatory requirements and uneven consumer adoption.

For Porsche, the strategic adjustments have been accompanied by efforts to reduce costs and protect profitability.

Volkswagen lowers full-year margin target

The latest Porsche developments come as Volkswagen has also reduced its expectations for its full-year operating margin.

Volkswagen on Friday lowered its full-year margin target to as much as 1%, compared with its previous range of 4% to 5.5%.

A significant factor behind the revision was a writedown at Porsche, highlighting the financial pressure facing the sports car division.

The development illustrates how problems at individual brands can affect Volkswagen’s wider financial performance because of the scale and structure of the group.

Porsche restructuring could continue through 2035

The workforce reductions already agreed at Porsche are spread over a long period, with the existing agreements expected to bring the workforce reduction to around one in five employees by 2035.

The reported additional 4,100 positions would add to the scale of the restructuring if the proposal moves forward.

For Porsche, the objective is to lower costs while adapting its business to changing market conditions. The company must simultaneously manage declining sales in some markets, investments in new technologies and uncertainty surrounding the pace of the transition towards electric vehicles.

The restructuring is therefore not limited to employment numbers. It is connected to broader questions about Porsche’s product strategy, manufacturing footprint, market priorities and cost structure.

What the reported job cuts mean

The reported additional job cuts underline the financial and operational pressure currently facing Porsche and its parent Volkswagen.

However, the 4,100 figure should be treated as a reported proposal rather than a completed workforce reduction. Volkswagen and Porsche have not confirmed the reported plan.

Porsche already has agreements covering around 9,000 job reductions by 2035, while the latest report points to the possibility of another 4,100 positions being removed.

The final scale and timing of any additional cuts will depend on further decisions by Volkswagen and Porsche, as well as discussions with employee representatives.

For the luxury carmaker, the immediate focus remains on reducing costs and responding to weaker Chinese sales while developing a strategy for its next phase of growth.