Volkswagen Group recently issued a profit warning of about $11.5 billion, mostly stemming from impairment costs related to Porsche’s misfortunes. This exacerbates a crisis that was already bad enough, and we find ourselves wondering how much further VW’s downward spiral will go. Around 100,000 jobs are on the chopping block as part of its restructuring plan, the biggest in the company’s history.
Porsche alone is expected to lay off 9,000 of its employees, and things will likely get worse before they get better. More details on how its future might look have recently surfaced, making that assumption seem like a very real possibility as opposed to mere speculation.
4,000 More Jobs Are Allegedly At Risk
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According to a report from German news agency Handelsblatt, Porsche might be quietly planning to cut down on its workforce even further. VW’s supervisory board is apparently urging the Stuttgart-based sports car brand to let go of 4,100 more employees, due to an overhead shortfall of €700 million (about $804 million). If this were to happen, it would bring the total number of layoffs at Porsche close to one in three employees by 2035.
But whether Porsche will actually go ahead with it is still up for debate, because the board’s recommendation is exactly that – a recommendation. CEO Michael Leiters explicitly denied these allegations in an internal company memo cited by Reuters, assuring staff that no further job cuts are planned besides the ones already announced.
What If Porsche Decides To Reconsider, Though?
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Leiter’s response may put people’s minds at ease for now, but who’s to say such measures won’t eventually be considered if the automaker’s struggles continue? Because desperate times call for desperate measures, as they say, and the next few years at Porsche will be anything but smooth sailing. Frankly, we very much doubt that it’s the last time we’ll hear about this debacle.
We’re hearing more and more bad news about VW Group’s financial situation as time goes by, so it may be foolish for anyone to assume that its subsidiary will be out of the woods anytime soon. And, as such, Porsche’s future prospects are still shrouded in uncertainty, regardless of any reassurances Leiter might give. But for the sake of its staff and the brand itself, we hope things take a turn for the better before any other drastic measures are considered.
CarBuzz Insight – Why This Matters:
Needless to say, encouraging one of your subsidiaries to reduce its workforce by a third is not a good sign, only making it more clear just how much trouble Volkswagen is in. And although we hate to sound so negative, it’s really hard to be optimistic about the company’s future at this point.
To be clear, we’re not saying VW will ultimately cease to exist, but how much damage does it have to absorb before it finally gets back on the right track? As is so often the case, time alone will provide the answer to that question, which means we’ll just have to keep observing how things unfold from here.
Sources: Handelsblatt, Reuters
