Porsche in crisis: Blume under pressure – does he have to make a decision?

Porsche in crisis: Blume under pressure – does he have to make a decision?

Porsche AG and its parent company, Volkswagen, are currently facing significant financial challenges that are putting corporate management under pressure. Oliver Blume, CEO of both companies, is facing growing criticism as shareholders demand he choose one of the two positions to set clear priorities. Blume describes the situation as a “violent storm” in which both domestic problems and external factors, such as the trade conflict with the USA, play a role. Porsche is particularly affected because the company produces for the US market in Europe.

A recent analysis shows that the Chinese market is collapsing faster than expected. Over the past two years, Porsche sales in China have fallen 39%, hitting automakers including Porsche hard. Sales peaked at 95,000 vehicles in 2021, but have fallen to fewer than 56,900 in 2024. As a result, Porsche's return fell to 14%, which is four percentage points less than the previous year. Last year, profits fell by 30%, and in the first quarter of this year they fell by over 40%.

Criticism of Oliver Blume's dual role

Since his appointment as CEO of Volkswagen in late 2022, Blume has been increasingly criticized. An editorial team of Handelsblatt has called on him to relinquish one of his leadership roles so as not to harm both brands. Blume is accused of not managing his time effectively between Volkswagen and Porsche. While Volkswagen is larger in terms of vehicle sales and owns 75% of Porsche, Porsche has a higher market cap due to better profit margins.

Control over Porsche remains directly with Volkswagen and the owner families Porsche and Piëch. The strategic issues, particularly regarding China and customs issues, remain unresolved, increasing uncertainty. Shareholders are increasingly losing patience with Blume, especially given that Porsche ranks low in the corporate governance index.

Return to combustion engine models and further measures

To stabilize the situation, Porsche plans to bring some models with combustion engines, such as the Macan, back onto the market. The decline in new registrations in Europe is already 23.3%. In addition, Porsche had to reduce expenses by around 1.5 billion euros last year, which was almost three times as high as originally expected. Sales and profit forecasts have also deteriorated; A 27% decline in operating income in the first nine months of the year indicates the critical situation.

Overall, it remains to be seen what steps Oliver Blume will take to lead Porsche out of this crisis. A clear decision regarding his dual role could not only ensure the company's planning security, but also regain the trust of shareholders.