Porsche Announces Another 5,000 Job Cuts as Former VW Cash Cow Loses Luster

German luxury sports car manufacturer Porsche announced on Monday (27th) that it has reached a new round of restructuring agreement with labor representatives, planning to cut another 5,000 jobs by 2035 to respond to pressures from declining demand in the Chinese market, underwhelming electric vehicle sales, and rising costs.

Porsche and employee representatives issued a joint statement saying the workforce reduction will be achieved through non-replacement of departing or retiring employees, expanded flexible retirement programs, and incentives for voluntary departures. No forced layoffs will be implemented.

Under the agreement, Porsche will extend employment and plant operation guarantees for its two major German facilities in Zuffenhausen and Weissach by five years until the end of 2035. At the same time, the company pledged to invest 2.1 billion euros (approximately 2.39 billion USD) to strengthen local production and R&D operations.

This marks Porsche's latest workforce reduction initiative. The company had previously announced plans to cut around 3,900 jobs by the end of 2030, including 2,000 temporary workers. Earlier this year, newly appointed CEO Michael Leiters announced an additional 500 job cuts. Porsche currently employs approximately 40,000 people and will further streamline management layers, simplify organizational structure, and reduce R&D spending.

Porsche was once the most stable profit contributor within its parent company, Volkswagen Group, but in recent years, shrinking Chinese consumer demand for German luxury vehicles, combined with underwhelming sales of EVs like the Taycan, has rapidly eroded its profitability. The brand has shifted from being the group’s golden goose to a burning hot potato in urgent need of restructuring.

Volkswagen itself is also facing significant restructuring pressure. Last week, the group warned that due to continued poor performance in the Chinese market, its revenue this year could decline by up to 3%. Some of Volkswagen’s factories are operating below capacity, and its overall costs are about 30% higher than some competitors. The group must cut at least 10 billion euros in indirect costs going forward. Porsche’s latest job-cut agreement highlights that the Volkswagen Group is facing a broader and more difficult cost reform.