Porsche cuts full-year outlook, warns of further uncertainty on US tariffs

Porsche's margins plunged in the first quarter, the sports car maker said on Tuesday, forcing it to cut its 2025 outlook due to weakness in main market China, rising supply chain costs and US tariffs disrupting the global car industry.

The US tariffs are expected to raise car prices by thousands of dollars, reducing demand and hurting job growth, rattling a car industry already struggling with a slowing transition to electric vehicles.

Porsche finance chief Jochen Breckner said tariffs would result in a hit of at least €100m (R2.11bn) in April and May, but added the carmaker, which has no US production, had so far taken no countermeasures.

This may change when there is further clarity about final tariff levels, Breckner said, adding “we will have to react accordingly in the market and pass on at least a proportion of the tariffs to end customers”.

Breckner said localising production in the US made no sense due to Porsche's low vehicle sales figures, even if the group, which is majority-owned by Volkswagen, were to team up with another VW brand.

Shares in Porsche were down 5% on Tuesday morning.

In April, Porsche, one of the carmakers most exposed to tariffs, said it had shipped added inventory to the US to get ahead of tariffs and kept prices constant for orders made in March.

Late on Monday the group said the tariffs, in place since April at 25%, weighed on its business in April and May and warned its adjusted outlook does not factor in the future effects of tariffs.

Porsche said it expects revenues of between €37bn (R781.1bn) and €38bn (R802.52bn) in 2025, down from its previous forecast of €39bn (R823.64bn) to €40bn (R844.80bn). Its profit margin is forecast to plunge to 6.5% to 8.5%, down from a previous forecast of 10% to 12%.

According to the average of analyst estimates in an LSEG poll, Porsche's operating margin is seen at 9.7% on revenue of €38.8bn (R819.46bn). Its first-quarter operating margin fell to 8.6%, below the 9.8% analyst average estimate in an LSEG poll.

“We believe the firm is taking the opportunity to kitchen sink estimates,” JPMorgan analysts said, adding it still expected Porsche to be able to get back to double-digit margins in 2026.

The carmaker, which at its stock market debut in 2022 had a higher valuation than its parent company, Volkswagen AG, has fallen from grace since, struggling in particular with low sales in China, its top market, where first-quarter sales dropped 42%.

Bill Russo, CEO of Shanghai-based advisory firm Automobility, said Chinese customers of electric cars had been drawn to domestic brands because of their improved technological offering.

“No foreign company believed the Chinese could somehow build equity that was superior to the foreign brands, especially the Europeans,” he said.

Porsche also said it would no longer pursue plans to expand high-performance battery production at its Cellforce subsidiary and cited a decline in demand in China for all-electric luxury cars.