Porsche AG has agreed to eliminate 9,000 jobs by 2035 as part of a comprehensive restructuring deal with labor officials that protects its main German sites and rules out compulsory redundancies. In a deal announced on Monday after months of negotiations, Porsche management and labor representatives agreed to 5,000 additional job cuts that avoid compulsory redundancies through measures like natural attrition, expanded partial-retirement programs, and voluntary severance agreements. These measures follow a first package of 3,900 job cuts agreed in February 2025 and another 500 announced by CEO Michael Leiters this year linked to the closure of subsidiaries. The company, which employed 42,600 people at the end of 2024, will reduce its workforce by approximately one in five positions as it navigates the challenging market conditions. With the latest announcement, Porsche plans to reduce its workforce of over 30,000 by 8,900 people through the combined job cuts.
The job cuts roughly correspond to the decline in sales volume, with analysts noting they are unavoidable to reduce costs as a return to strong growth in China is not expected. As reported by Reuters, Porsche's CEO Michael Leiters was tasked with overhauling the business after sales in Porsche's once highly lucrative China market collapsed and its EV strategy stalled. The maker of the 911 sports car has seen profits collapse due to plunging sales in China, where home-made electric vehicles now dominate, as well as US tariffs and a costly decision to hit the brakes on its troubled electric transition. The agreement underscores mounting pressure across Porsche parent Volkswagen AG, which last week warned that group revenue may fall as much as 3% this year as its China slump deepens. VW has a number of underused factories, is saddled with costs roughly 30% higher than some competitors and needs to trim at least €10 billion ($11.4 billion) more in overhead expenses.
The new agreement includes €2.1 billion of investment at Zuffenhausen and Weissach as part of an effort to shore up its German operations. According to Reuters, the deal announced by Porsche also includes guarantees to keep sites open for another five years, until the end of 2035, as well as €2.1 billion ($2.4 billion) in investments in its main factory of Stuttgart-Zuffenhausen and its R&D centre in Weissach. The latest pact follows an earlier plan to reduce Porsche's workforce by about 3,900 by the end of the decade, including 2,000 temporary workers. The company has pledged to remove some management layers, simplify its organization and reduce research and development spending. Additional cost-cutting measures announced include deferring wage increases until 2035 and having senior executives forgo base salary increases in 2027 and 2028.
Other German carmakers including Mercedes-Benz and BMW are also cutting costs as they navigate the shift to electric vehicles in a race with Chinese rivals while absorbing the impact of high tariffs. As reported by Reuters, Porsche's supervisory board gave its blessing to the additional cuts during a meeting last Wednesday. The announcement follows Volkswagen CEO Oliver Blume's push for a doubling of job cuts across the Volkswagen group to 100,000, measures he says are necessary to remain competitive as more Chinese brands come to Europe. Blume has also warned that four of the group's factories, including one belonging to premium brand Audi, are threatened with closure after 2030. Porsche is among automakers which have recently taken a hefty hit after ploughing huge sums into the electric transition, only to find demand weaker than expected, with measures including delaying the introduction of some fully electric cars and extending the life of some combustion engine and hybrid models.
