Porsche to Cut 5,000 More Jobs as Germany’s Auto Industry Struggles

By Staff, Agencies

German luxury automaker Porsche will cut an additional 5,000 jobs by 2035, increasing its planned workforce reduction to approximately 9,400 positions as Germany’s automotive sector continues to grapple with rising costs, declining competitiveness and mounting economic pressures.

The Volkswagen-owned company reached an agreement with labor representatives on Monday to implement the latest job cuts without compulsory layoffs. Most of the reductions will be achieved through natural attrition, partial retirement, and voluntary severance programs.

Under the agreement, remaining employees will face slower wage increases, reduced bonus payments, tighter restrictions on remote work and changes to break schedules and production cycles.

Porsche had already announced plans to eliminate 3,900 jobs, while another 500 positions will disappear through the closure of several subsidiaries. Altogether, the reductions amount to roughly one-fifth of the company’s workforce, with Germany’s higher-cost operations expected to bear the largest share of the cuts.

The automaker cited weak consumer demand, growing competition from Chinese manufacturers, US tariffs and setbacks in its electric vehicle strategy as key factors behind the restructuring. However, the layoffs also come amid a broader downturn affecting Germany’s industrial sector.

Germany’s manufacturing industry has faced increasing challenges following the loss of Russian pipeline gas supplies, the closure of the country’s remaining nuclear power plants, and the transition toward renewable energy sources. Earlier this month, German Chancellor Friedrich Merz acknowledged that the country continues to face an “ongoing energy crisis due to the lack of Russian gas.”

The effects have extended across Germany’s industrial base. The country’s economy contracted in both 2023 and 2024—the first consecutive annual declines in more than 20 years—while corporate insolvencies rose by more than 22% in each of those years. Since 2022, major manufacturers including BASF, Bosch, and Volkswagen have announced factory closures and significant workforce reductions.

At the same time, German and European Union policies have pushed manufacturers to accelerate investment in electric vehicle production, even as consumer demand has lagged behind official targets. Germany’s decision to abruptly end electric vehicle purchase subsidies in late 2023 further weakened demand.

Porsche has been among the companies most affected by these developments. After investing heavily in an all-electric vehicle platform, the company later reversed course, contributing to extraordinary expenses of €3.9 billion in 2025. Its operating profit subsequently fell by nearly 93%, dropping from €5.6 billion to €413 million. Porsche has also experienced a sharp decline in sales in China, with deliveries falling to less than half of their 2021 peak.

The latest announcement comes as Volkswagen is reportedly considering expanding its own planned workforce reduction from 50,000 jobs to as many as 100,000. Overall, Germany’s automotive industry has eliminated around 125,000 jobs since 2019, with Mercedes-Benz, BMW and major automotive suppliers also implementing significant cost-cutting measures and staff reductions.