German luxury sports car maker Porsche has lowered its revenue and profit forecasts for 2025 due to challenges in its key market, China, as well as rising supply chain costs and U.S. tariffs that are disrupting the global automotive sector.
The 25% U.S. import tariffs, in effect since April, are expected to push car prices higher, potentially reducing demand and limiting job growth in the already strained automobile industry. This comes as the sector grapples with a slow shift to electric vehicles.
In an effort to mitigate the impact of these tariffs, Porsche, which does not produce cars in the U.S., shipped additional inventory there in March and kept prices steady for orders placed before the tariff increase.
However, the company warned that these tariffs would affect its business in April and May. Porsche’s updated outlook for 2025 now expects revenues between 37 billion and 38 billion euros, down from its prior estimate of 39 billion to 40 billion euros. It also forecasts a drop in its profit margin to 6.5-8.5%, a significant decrease from the previous estimate of 10-12%.
Analysts have projected Porsche’s operating margin to be 9.7%, with expected revenues of 38.8 billion euros. While some analysts, like those at JP Morgan, believe Porsche is adjusting its estimates conservatively, they remain optimistic that the company can return to double-digit margins by 2026.
Porsche, which debuted on the stock market in 2022 with a higher valuation than its parent company, Volkswagen AG, has faced difficulties, particularly with falling sales in China, its largest market. In the first quarter of 2025, Porsche’s sales in China dropped by 42%.
Bill Russo, CEO of Shanghai-based advisory firm Automobility, explained that Chinese electric car buyers have shifted to local brands due to advancements in technology.
Additionally, Porsche announced it would halt plans to expand high-performance battery production at its Cellforce subsidiary, citing decreased demand for all-electric luxury vehicles in China.
Porsche is set to release its first-quarter results later today.
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