Porsche’s annual net profit collapsed by 91 percent to just €310 million in 2025, while Chinese domestic brands for the first time accounted for more than 50 percent of cars sold in China above the 400,000-yuan threshold. The two developments, unfolding in the same quarter, mark a sharp acceleration of the competitive pressure that German luxury carmakers have long feared. Porsche shares have underperformed the DAX by 146 percentage points since their 2022 listing, a decline that fund manager Ingo Speich of Deka called “not a cyclical dampener – this is a structural problem.”

Behind the numbers lie three intersecting forces. German premium manufacturers, above all Mercedes-Benz, BMW and Audi, have been slow to field compelling electric luxury models, leaving a supply gap that Chinese EV brands are filling with vehicles that match European performance and undercut on price. At the same time, the Chinese market – long the profit engine for Stuttgart and Munich – has weakened, while US tariff policy has added cost. Porsche’s own mis-steps compounded the damage: an electric strategy that misread demand, a model portfolio that became, in the words of new CEO Michael Leiters, “too complex – even compared to the competition,” and a leadership structure that kept former chief Oliver Blume in a dual VW-Porsche role long after investors had lost confidence.

Leiters, who took over in January, used the virtual annual general meeting to promise a leaner organisation, fewer model derivatives, and a development process that will “intelligently” exploit VW Group modular kits. He also reaffirmed investment in combustion engines and performance hybrids alongside electric drives, explicitly rejecting the notion that hybrid is merely a bridge technology. The restructuring will cut jobs – negotiations with labour representatives are, he said, “at full speed” – and comes on top of an existing plan to eliminate 3,900 positions by 2029. It is part of a wider VW Group retrenchment that aims to shed some 50,000 roles across Volkswagen, Audi, Porsche and the software unit CARIAD by the end of the decade. Viewed from China, the ambition is symmetrical but opposite: Zeekr vice-president Mars Chen told the South China Morning Post that Chinese carmakers have an edge in electric luxury and predicted “one to two Chinese brands among the global top five” in the segment.

The next concrete milestone is Porsche’s capital markets day on 7 October, where Leiters is expected to unveil a full strategy through 2035. Until then, the company has confirmed a 2026 revenue forecast of €35–36 billion with an operating margin of 5.5–7.5 percent, absorbing €800–900 million in one-off restructuring charges. Whether that roadmap can restore investor faith while Chinese rivals consolidate their home market and push into Europe will determine the shape of the luxury car hierarchy for the next decade.