[opinion] - hmmm…VW/Audi/Porsche _IS_ in trouble…

[Tooney]

Slides from investor conference call about Porsche Strategic Re-alignment: https://a.storyblok.com/f/274296/x/af421b23e0/update_strategic_realignment.pdf

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[smoothound]

the glass is at 50% capacity - as to if the coming news is 1/2 full or 1/2 empty it depends on your perspective and goals…it will be news but the disposition will be conditional…for me personally it fits with the narrative of this entire thread…but other's may disagree

.....If you are emptying it, it's half empty.... If you are filling it, it's half full....

 

[Tooney]

Mercedes is gearing up to react quickly if its cars run into any software issues.

The 2026 Mercedes-Benz CLA and the 2027 Mercedes-Benz GLC are the automaker’s first truly software-defined vehicles, meaning they have the brains and chips for virtually everything on the car that's controlled by software to be updated over-the-air. They have the new Mercedes-Benz operating system, known as MBOS, as well as fourth-generation MBUX infotainment systems with fancy touchscreens, all developed in-house.

The new MBOS represents a paradigm shift, says Ola Källenius, chairman and CEO of Mercedes-Benz Group. It's the gift that keeps on giving, with 100 percent of the car reachable via over-the-air updates.

Mercedes says it has spent three years building a pipeline to be able to deploy fully complete automated driving and entertainment software packages for its cars within a week. “That is the speed we have reached," Schäfer says. Now, cars come in with an empty electronic control unit (ECU) and then Mercedes loads [the software] into it as part of the production process, he adds. In the past, the ECU came from a supplier with the software already pre-loaded. Not anymore. Mercedes wanted an end-to-end software package it created itself.

 

[Tooney]

Porsche Gentrifying ICE Is Just the Start of Rich-Only Features

• Porsche will reintroduce flat-six engines to the next 718 Boxster and Cayman.
• Only top-tier versions will feature ICE, with base models staying fully electric.
• Manual transmissions and naturally aspirated engines are becoming luxury items.

 

[Tooney]

Porsche's Luxury Image Is Looking Threadbare

The German sports carmaker’s market value has declined by more than $106 billion since its 2023 peak

Is Porsche still a luxury brand? The question might seem ridiculous or even impertinent to someone yearning for one of its 911 sports cars that cost a minimum of US$130,000 (S$168,000), or more than $710,000 in Singapore, and considerably more for the most thrilling and customised derivatives.

But after warning on Sept 19 that it will barely scrape a profit in 2025 and announcing a big cut to its medium-term earnings ambitions, Porsche’s cachet – at least in the eyes of investors – is now very much up for debate.

The latest profit downgrade – the fourth in quick succession – undermines the German carmaker’s claim to have a luxury business model, with negative implications for the way the stock is valued.
. . .
Porsche’s management insisted on its investor call on Sept 19 that from both a product and financial perspective, it should still be considered a luxury company.

A business facing such severe headwinds would typically formulate a strategy to return profitability to prior levels.

However, the new medium-term guidance includes the various measures Porsche is already taking in an attempt to restore profitability: cutting jobs, reducing electric vehicle investments, extending the life of combustion engine models, offering new petrol-powered sport utility vehicles and elevating its 911 franchise via more derivative versions and greater customisation.

In other words, without its big strategy reset, Porsche’s future would be even bleaker.

The new operating margin corridor would suffice for a premium carmaker – Mercedes Benz and BMW both aim for a roughly 10 per cent return on sales in the medium term – but surely Porsche should aspire to more?
. . .
What can Porsche do? Although several top executives have been replaced, it is astonishing that after such a fall from grace, Porsche still shares chief executive Oliver Blume with its largest shareholder Volkswagen. (VW on Sept 19 separately disclosed a one-time hit to its operating results of more than €5 billion due to goodwill impairment and Porsche’s reduced profit outlook.)

Porsche is reportedly hunting for a successor, but VW should have acted long ago to provide the 911 maker with a full-time driver. Alas, VW often plays by different corporate governance standards, to the detriment of its share price.

Beyond that, Porsche appears resigned to a more modest future: The measures announced on Sept 19 are the “final steps” in the realignment of its product strategy, it insisted.

In a world of intensifying Chinese competition and higher trade barriers, there may be fundamental limits to Porsche’s earnings power. And Porsche may also be unwilling to countenance the deeper cuts needed to make the brand more exclusive. Or both.

A combination of collapsing sales in China, the slower than-expected uptake of electric vehicles, the United States’ 15 per cent import tariffs and a weakening dollar has hamstrung its earnings potential.

 

[whitex]

Porsche still shares chief executive Oliver Blume with its largest shareholder Volkswagen

Perhaps it’s a cost saving measure. CEO’s aren’t cheap nowadays. For 2025, this could be the difference between making a tiny profit, or losing money.

 

[Fish Fingers]

So here's a thought.....
Did Porsche make an actual profit on the J1.1 overall?

It states in the article above that MB etc aim to make 10%, so I imagine Porsche is higher.
But the number of costly recalls and warranty work on the Taycan must be considerable. The heater replacements alone weren't cheap - and mine had 3.

Overall I estimated mine had about £20k of recall/warranty work in the first 3 years on a car which cost £85k.
And servicing profit will be low compared to the ICE fleet.

So from a business POV, maybe the Taycan has not actually been very profitable, if at all?

 

[daveo4EV]

So here's a thought.....
Did Porsche make an actual profit on the J1.1 overall?

It states in the article above that MB etc aim to make 10%, so I imagine Porsche is higher.
But the number of costly recalls and warranty work on the Taycan must be considerable. The heater replacements alone weren't cheap - and mine had 3.

Overall I estimated mine had about £20k of recall/warranty work in the first 3 years on a car which cost £85k.
And servicing profit will be low compared to the ICE fleet.

So from a business POV, maybe the Taycan has not actually been very profitable, if at all?

I would be surprised if the Taycan program "made moneY" - but given the complexity of big corporations and cost accounting - I'm pretty sure any competent corporate accountant could make it look any way they want depending on capitalization schedules and cost accounts as to what you allocate as cost to the Taycan vs. general business…

honestly we'll never know

also I don't buy the "demand softening" story for EV's when Porsche is being handed it's ass in China because Chinese customers are buying EV's - they just happen to be non-Porsche EV's…

what is really happening, but they can't say it - is Porsche does not have nor does it make competitive products that are worth what they want/must charge for them…and that's a serious problem for them.

my $0.02 YMMV

 

[whitex]

also I don't buy the "demand softening" story for EV's when Porsche is being handed it's ass in China because Chinese customers are buying EV's - they just happen to be non-Porsche EV's…

^THIS

what is really happening, but they can't say it - is Porsche does not have nor does it make competitive products that are worth what they want/must charge for them…and that's a serious problem for them.

Well, we may not have all the details, but the high level facts are known - Chinese consumer preferences switched to buying non-Porsche EVs instead of Porsche EVs, apparently even instead of Porsche ICE vehicles (since most Porsche sales tanked there, not just EV). In other words, Chinese consumers no longer see the value value per yuan in Porsche cars. Did Porsche overprice them? Did Porsche fall too far behind on value, perhaps technology or quality? Did Porsche somehow become controversial to own like Teslas did during Elon's bromance with Trump? That we don't know, but we know the results, and we know EV demand is still going strong worldwide.

 

[Jasper4S]

A simple google query learnt me:

- Price advantage: chinese EVs are cheaper due to scale and government support
- Subsidies and taxes: incentives favor domestic brands
- Tech features: faster charging, bigger batteries, advanced infotainment (with updates)
- Consumer preference: younger buyers see local brands as cooler and more innovative older buys feel pride in supporting chinese brands
- Import tariffs: European (and American) EVs end up more expensive

In other words, nothing that a small change can fix, so better to take a step back and do what you are good at in markets that still ‘support’ you. Smart move from Porsche

 

[whitex]

In other words, nothing that a small change can fix, so better to take a step back and do what you are good at in markets that still ‘support’ you. Smart move from Porsche

While that is what Porsche is doing, the missing part of the above statement is that the markets that still "support" Porsche are shrinking every year. Perhaps Porsche should be doing something to expand their markets, rather than focusing solely on disappearing markets. I get that it's hard, and for company like Porsche it might require an acquisition to catch up with innovation (large companies have an incredibly hard time innovating fast), but the longer they wait, the less likely they'll be able to pull it off before entering irrelevance.

 

[chun]

Porsche it might require an acquisition to catch up with innovation (large companies have an incredibly hard time innovating fast), but the longer they wait, the less likely they'll be able to pull it off before entering irrelevance.

VW tried that with rivian, before realizing that 800v architecture won’t work in their ICE platforms and decided to freeze the partnership.

https://eletric-vehicles.com/rivian...d-crisis-meeting-as-jv-faces-slowdown-report/

VW is trying to tell the company they invested in for software quality, how to do software, despite having only ever created shit software themselves.

They also have Rimac for battery, motors, inverters etc; which is becoming more of a technology seller than car maker as they can’t sell any car.

The only way for VW group and porsche to stay relevant is to accept that changes are needed, like Mercedes is doing, like BMW is doing.
But with the incompetent leadership they have at the moment, focusing on creating “new colors” and making 2h documentaries about that color, it will probably take a massive restructuring.

 

[Fish Fingers]

In other words, nothing that a small change can fix, so better to take a step back and do what you are good at in markets that still ‘support’ you. Smart move from Porsche

And that's where they fail miserably in my experience (UK).

The dealership experience was the worst I have had from any manufacturer in 40+ years driving.
And never any apology for inconveniences/no loan cars etc etc.

And Porsche themselves seem to align with Rolex and the Royal Family in that they don't feel they need to apologise or explain anything, because they are somehow superior and don't need to.

This arrogant attitude surprised me at the price point of Porsche. I thought superior cost would mean superior customer service......not a cash cow customer with MUG written on his forehead.

 

[Jasper4S]

And that's where they fail miserably in my experience (UK).

The dealership experience was the worst I have had from any manufacturer in 40+ years driving.
And never any apology for inconveniences/no loan cars etc etc.

And Porsche themselves seem to align with Rolex and the Royal Family in that they don't feel they need to apologise or explain anything, because they are somehow superior and don't need to.

This arrogant attitude surprised me at the price point of Porsche. I thought superior cost would mean superior customer service......not a cash cow customer with MUG written on his forehead.

I'm not defending the dealership experience, which clearly fell short. But there's a difference between Porsche AG's strategic direction and the way a dealership operates. Porsche's decisions regarding markets and products are corporate-level choices—they don't automatically fix local dealer practices. Every German automaker relies on intermediaries for sales and service, which is something for example Tesla has disrupted. They cut the middle-man to save costs (not to fix the dealership attitudes) That issue is separate from Porsche AG's strategy and won't be solved simply by their new market focus.

My reaction is purely on the new strategic direction. I feel you on the bad communication and poor brand experience. I did not have a bad experience yet. But read too many here on the forum to know it exists.

 

[D00notD00d]

Recent announcements from Porsche are inconsistent with current EU and UK legislation, which effectively requires all cars sold by 2035 to be EVs, else face fines, making ICE production uneconomic apart from high end 911s etc.

The current legislation isn’t compatible with market demand, European manufacturing capability or infrastructure implementation profitability.

Perhaps that will now dawning on the legislators - this article trails a review which may result in law changes, perhaps as a result of pressure from manufacturing and political drift to the right - https://www.reuters.com/sustainabil...035-zero-emission-vehicles-target-2025-09-12/

Changes to UK tax law from this year removes the previous Benefit In Kind advantage for expensive PHEVs such as Porsche and Range Rover. That has resulted in a big fall off in their sales. Porsche’s mention of continuing PHEVs (and ICE) seems inconsistent with the legislation and the demand
https://a.storyblok.com/f/274296/x/af421b23e0/update_strategic_realignment.pdf

A decade ago a simple 80% solution to the car pollution problem would have been to compel and support a transition to PHEVs and small EVs, to support a minimum 100 mile range, sufficient for the majority of journeys. Instead dimwit myopic politicians tbought they could amend a century of development within a decade. And they didn’t address the major sources.

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