By Christoph Steitz
FRANKFURT (Reuters) – Porsche’s margins plunged in the first quarter, the sportscar maker said on Tuesday, forcing it to cut its 2025 outlook due to weakness in main market China, rising supply chain costs and U.S. tariffs that are disrupting the global car industry.
The U.S. tariffs are expected to raise car prices by thousands of dollars, reducing demand and hurting job growth, rattling an automobile industry already struggling with a slowing transition to electric vehicles.
Porsche finance chief Jochen Breckner said that tariffs resulted in a hit of at least 100 million euros ($114 million) in April and May, but added that the carmaker, which has no local U.S. production, had so far taken no counter-measures.
This may change when there is further clarity around final tariff levels, Breckner said, adding “we will of course have to react accordingly in the market and pass on at least a proportion of the tariffs to end customers”.
Breckner said localising production in the United States made no sense at the moment due to Porsche’s low vehicle sales figures, even if the group, which is majority-owned by Volkswagen, were to team up with another VW brand.
Shares in Porsche were down 5%, as of 0751 GMT.
In April, Porsche, one of the carmakers most exposed to tariffs, said it had shipped added inventory to the United States to get ahead of tariffs and kept prices constant for orders made in March.
The group late on Monday said the tariffs, in place since April at 25%, weighed on its business in April and May, and it warned that its adjusted outlook does not factor in the future effects of tariffs.
CHINA WOES
Porsche said it now expects revenue of between 37 billion euros and 38 billion euros ($42.17 billion-$43.31 billion) in 2025, down from its previous forecast of 39 billion to 40 billion euros. Its profit margin is forecast to drop to 6.5-8.5%, down from a previous forecast of 10-12%.
According to the average of analyst estimates in an LSEG poll, Porsche’s operating margin is seen at 9.7% on revenue of 38.8 billion euros. Its first-quarter operating margin fell to 8.6%, below the 9.8% analyst average estimate in an LSEG poll.
“We believe … the firm is taking the opportunity to kitchen sink estimates,” JP Morgan analysts said, adding it still expected Porsche to be able to get back to double-digit margins in 2026.
The car maker, which at its stock market debut in 2022 had a higher valuation than its parent company, Volkswagen AG, has fallen from grace since, struggling in particular with low sales in China, its top market, where first-quarter sales dropped 42%.
Bill Russo, CEO of Shanghai-based advisory firm Automobility, said Chinese customers of electric cars had been drawn to domestic brands because of their improved technological offering.
“No foreign company believed that the Chinese could somehow build equity that was superior to the foreign brands, especially the Europeans,” he said.
Porsche also said it would no longer pursue plans to expand high-performance battery production at its Cellforce subsidiary, and it cited a decline in demand in China for all-electric luxury cars.
($1 = 0.8772 euros)
(Reporting by Gnaneshwar Rajan in Bengaluru, Tom Sims and Christoph Steitz in Frankfurt, Victoria Waldersee in Stuttgart and Amir Orusov in Gdansk; Editing by Sonali Paul, Muralikumar Anantharaman, Susan Fenton and Sherry Jacob-Phillips)
