Luxury car manufacturer Porsche announced Thursday it will eliminate 1,900 positions following a decline in sales in China and a challenging transition to electric vehicles, a latest setback for Germany's struggling automotive industry.
The cuts will be implemented in the next few years at the luxury brand's Stuttgart headquarters and its adjacent research center in Germany, according to Porsche.
Faced with rising production costs domestically, weak demand, intense competition, and a slow transition to electric vehicles, Germany's dominant automotive industry is grappling with a deepening crisis.
"We have many challenges to overcome," says Andreas Haffner, Porsche's human resources chief, in an interview with daily newspaper Stuttgarter Zeitung.
He attributed the delayed expansion of electromobility and the challenging geopolitical and economic circumstances, but he assured that none of the expected cuts would involve mandatory layoffs.
The manufacturer of the 911 sports car employs approximately 42,000 employees globally. It had initiated workforce reductions in Germany by allowing temporary contracts to lapse last year, but has now decided to make further cuts.
Porsche has traditionally been one of the most profitable subsidiaries of the Volkswagen Group, Europe's leading automobile manufacturer that produces a total of 10 different brands.
However, its success has waned, and it experienced a three-percent decline in global shipments last year, primarily due to a 28-percent decrease in China.
Germany's automotive giants have all been experiencing declining business in China, where they had invested significantly in recent decades, due to intense competition from new local competitors, particularly in the electric vehicle market.
They have also been negatively impacted by a slower-than-anticipated transition to electric vehicles, following significant investments in the shift to electric.
Porsche stated last week that it intends to concentrate on manufacturing more models with combustion engines and plug-in hybrids in an effort to increase profitability.
Porsche recently announced the sudden departure of two high-ranking officials, citing a reported disagreement with the company's management.
Other parts of Volkswagen are also experiencing significant changes, with the group announcing in December plans to reduce its workforce by 35,000 positions at the core VW brand over the coming years.