Porsche is deliberately scaling back its footprint in China as competition from domestic automakers intensifies, even as the German luxury carmaker reported a sharp rebound in operating profit for the first nine months of 2026.

The company said on October 27 that it has significantly reduced its exposure to the Chinese market, where homegrown brands including BYD, Geely and Xiaomi have been gaining ground, particularly in electric vehicles. Porsche Chief Financial Officer Jochen Breckner told analysts during the company's third-quarter earnings webcast that the automaker's "geographically balanced sales footprint continues to provide resilience across different markets." Porsche expects that lighter reliance on China will make its overall business less vulnerable to swings in that country's demand.

The strategic shift comes as Porsche's global numbers show continued strain. Deliveries worldwide fell 16% year over year to 178,532 vehicles in the first nine months of 2026, with North America holding on as Porsche's largest market by volume. Revenue dropped 5.9% to 25.28 billion euros over the same period.

Despite the weaker top line, Porsche's operating profit surged to 1.74 billion euros, or roughly $1.94 billion, up from just 40 million euros a year earlier. That earlier figure had been dragged down by about 2.7 billion euros in restructuring charges tied to the company's broader cost-cutting efforts, which have included thousands of job cuts as Porsche adjusts to softer demand and heightened competition.

Analysts at Citi noted in a Tuesday report that Porsche's underlying operating profit has held up relatively well compared with other German premium automakers, even with lower deliveries and rising costs. Citi said Porsche has laid out a plan to restore double-digit underlying operating profit margins, with that recovery expected to take hold starting in 2028. The bank also projected that Porsche's net cash flow should climb back above the levels seen at the time of its initial public offering by 2031.

Citi characterized 2027 as likely to be a trough year for the company but called its multiyear recovery plan credible, with meaningful improvement anticipated from 2028 onward. Breckner echoed that outlook, telling analysts that 2027 results will come in below 2026 levels due to lower volumes, weaker absorption of fixed costs, and lingering restructuring expenses. Still, Porsche reaffirmed its 2026 guidance, projecting an operating return on sales between 5.5% and 7.5% for the year.

Source: CBT News

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