Porsche cuts a quarter of its workforce and Mercedes sales fall as China demand gives way

Porsche is cutting 25 percent of its workforce as its China sales collapse¹. The Volkswagen-owned sports car brand is grappling with those falling sales and with the aftermath of a costly reversal of its electric vehicle strategy¹. An overambitious move into electric vehicles and slow growth in China have pushed Porsche to refocus on gasoline-powered luxury cars².

Mercedes-Benz reported third-quarter car sales down on the same cause. Reuters put the decline at 8 percent as China demand weakness persisted, alongside model changeovers, while reporting electric vehicle sales up 52 percent³. Euronews reported global sales down 6 percent over the period⁵. The Wall Street Journal reported battery-electric car sales rising 61 percent year on year to 68,400 units⁴. Car sales rose 6 percent in the United States and 5 percent in Europe³.

Why it matters to investors

China has been the profit centre for both brands, so a decline there is not offset by growth elsewhere. Mercedes said it achieved its highest quarterly battery-electric vehicle sales, and that record was still not enough to offset weakness in China^4,5.

The two companies are responding in opposite directions, which is the useful signal. Porsche is retreating from electric vehicles toward gasoline luxury cars and shrinking its headcount^1,2. Mercedes is posting record electric volumes while its overall book shrinks^3,5. Neither approach has so far restored growth, which points to the market rather than to either strategy.

What to watch

Brussels is preparing to intervene. The European Union plans an import cap on Chinese hybrid cars to protect the sector and to balance trade⁶. A cap on hybrids rather than on pure electric vehicles follows where Chinese exporters have been gaining, and it would change the competitive arithmetic inside Europe itself⁶.

The scale of the Chinese advance is visible outside Europe too. Data released this week by Australia’s Federal Chamber of Automotive Industries and its Electric Vehicle Council showed Chinese-made cars outselling those from Japan and Thailand combined⁷. For investors in German industrial earnings, the questions are whether the gap between the reported sales declines of 8 percent and 6 percent narrows in the full accounts, whether Porsche’s job cuts are the end of its restructuring or the start, and whether the European import cap arrives in time to matter^1,3,5,6.