Porsche has become a financial burden for Volkswagen — TimesLIVE

In Germany, Volkswagen recognized an impairment of €6 billion on its 75% stake in Porsche due to weaker financial expectations from the sports car manufacturer. The group linked this to a new profit warning, issued several weeks after agreements on significant job cuts as part of the largest restructuring in the group’s 89-year history.

According to TimesLIVE, a year earlier Volkswagen had already recognized a €2.7 billion impairment on Porsche. The current impairment reduced Volkswagen’s goodwill related to Porsche by more than a third, to approximately €10 billion. In 2022, when Porsche went public, this figure stood at €18.8 billion.

Pressure in China and the United States

Porsche, which had long been one of Volkswagen’s main sources of profit, has lost ground in the Chinese market and suffered costly miscalculations during the transition to electric vehicles. The company has reduced the number of dealerships in China, while its business in the United States is under pressure from tariffs, putting future sales volumes into question.

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Automotive industry analyst Ferdinand Dudenhöffer said that Porsche’s days as a profit driver are over. According to him, the “value over volume” strategy is leading to a shrinking brand: even if high margins are maintained, the total amount of profit will be relatively small.

Skoda overtakes Porsche

Porsche’s previously high margin has fallen below that of the broader Volkswagen Group and the Skoda brand. Independent automotive analyst Matthias Schmidt noted that the Czech brand has effectively become the group’s new Porsche in terms of profitability.

Porsche CEO Michael Leiters said in an internal address that the company maintains its medium-term target of a 10–15% margin. At the same time, analysts note that Porsche needs sales to generate cash and support Volkswagen’s restructuring. The group aims to achieve an operating margin of 9% by the end of the decade, compared with no more than 1% this year.