This article first appeared on GuruFocus.
Porsche AG (POAHY) is facing a difficult inflection point as deliveries fell 10% last year, marking its steepest decline since 2009 amid weakening electric-vehicle demand and a pronounced slowdown in China. The Volkswagen luxury brand delivered 279,449 vehicles in 2025, with China and Germany accounting for much of the contraction. Management pointed to supply gaps for combustion-engine versions of the 718 sports car and Macan SUV, while acknowledging that an earlier push toward an aggressive EV rollout disrupted model planning and weighed on margins at a time when the US, now Porsche’s most important market, has also been affected by tariffs.
China emerged as the clearest pressure point, with deliveries in the country down 26% as intensifying competition and a broader economic slowdown curbed luxury spending. Local manufacturers including BYD (BYDDF), Xiaomi (XIACY) and Huawei have increasingly targeted wealthier buyers with premium materials and advanced software and battery technology, challenging established European brands. Similar demand headwinds are affecting BMW and Mercedes-Benz in the market, while in Europe Porsche was forced to phase out certain combustion-engine models that did not meet stricter EU cybersecurity requirements, further limiting supply and weighing on regional deliveries.
The operational strain has translated into market pressure, with Porsche shares falling as much as 1.2% in Frankfurt and the stock down more than 30% over the past year, resulting in its removal from Germany’s DAX Index. Demand for the Taycan declined 22% last year, and Porsche has warned that its EV course correction could reduce operating profit by as much as 1.8 billion in 2025. Newly appointed CEO Michael Leiters, who took over on Jan. 1, is now tasked with steering a turnaround, including negotiating additional cost cuts, as management has indicated that 2025 could represent a low point, with any return to double-digit margins targeted only for the years after 2026.