Porsche, long Volkswagen’s most dependable source of profit, has become one of the group’s biggest headaches, adding fresh strain to Chief Executive Oliver Blume’s efforts to overhaul Europe’s largest carmaker. Less than four years after its record stock market debut, the luxury sports car maker has gone from flagship earner to cautionary tale, losing ground in China and suffering from a rocky push into electric vehicles.

The trouble extends well beyond Porsche. Thousands of workers have taken to the streets at Volkswagen plants across Germany to protest job cuts, underscoring how the country’s auto industry is being squeezed from multiple directions — rising competition from Chinese manufacturers and tariffs imposed by the United States.

Volkswagen issued its latest profit warning on September 18, linking it to a €6 billion ($6.9 billion) writedown on its 75 percent stake in Porsche. The announcement came just weeks after the group had agreed to sweeping job cuts as part of the largest restructuring in its 89-year history.

Ingo Speich of Deka, one of Volkswagen’s top ten investors, called the writedown a "very negative signal" coming so soon after the restructuring deal was struck. He warned that the company’s position "remains very fragile" with "very limited" visibility, questioning whether the planned measures would prove sufficient. Analysts at Jefferies pointed to a pattern of "endless clean-up surprises," suggesting weak oversight within the group, especially following a €2.7 billion impairment just a year earlier.

Volkswagen attributed the writedown to lowered financial expectations for Porsche, which debuted on the stock market in 2022 in one of Europe’s largest IPOs in recent memory. Industry analyst Ferdinand Dudenhoeffer declared bluntly that "the days of Porsche being a profit driver are over," noting that the brand’s margins have fallen below Volkswagen’s group average and even trail those of its budget brand, Skoda.

Porsche chief executive Michael Leiters, in an internal memo, maintained that the company’s medium-term margin target of 10 to 15 percent remains unchanged ahead of its capital markets day in October. Still, the brand’s retreat from China — including dealership closures — combined with tariff pressure in the US has raised doubts about future sales volumes.

Stefan Bratzel of research group CAM said the pressure on Porsche "could not be bigger right now," adding that cost-cutting alone will not resolve Volkswagen’s broader crisis. Porsche’s goodwill value has dropped by more than a third to roughly €10 billion, down from €18.8 billion at the time of its listing.

Analyst Matthias Schmidt suggested Skoda has effectively become "the new Porsche" within the group. Meanwhile, Bernstein analysts noted that Porsche’s decline could, cynically, strengthen Blume’s case for pushing even deeper restructuring across Volkswagen.

Source: Cyprus Mail

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