Porsche only partly fixes backseat driver problem
20/10/2025 12:00
The author is a Reuters Breakingviews columnist. The opinions expressed are his own. By Neil Unmack LONDON, Oct 20 (Reuters Breakingviews) - Porsche P911_p.DE is starting to do something about its backseat driver problem. New boss Michael Leiters improves a status quo that saw Oliver Blume run both the $45 bln sports-car maker and its parent Volkswagen VOWG.DE. Yet a complex governance picture may limit his strategic freedom. Porsche’s dual CEO structure seemed like a tolerable flaw when Volkswagen listed a 25% stake in 2022. That year the group grew revenue by over 10%, and converted nearly 18% of the top line into operating profit, making a Ferrari-style margin target of 20% seem plausible. Yet the double role for Blume, a Porsche CEO who had been promoted to run the parent group shortly before the initial public offering, raised many potential issues. In theory, he might have had to take decisions that suited Volkswagen more than Porsche. And if Blume had ever needed to be fired, it would have been hard for the German carmaker to eject both the manager of its top brand and itself. In any case, Porsche’s woes have fast-tracked the need for action. Rapid revenue growth has reversed, owing to collapsing sales in China, a stagnant Europe, and latterly tariffs in America. The group will sell nearly 8% fewer cars in 2025 than in its IPO year, as per Visible Alpha data, at just over 286,000 units. That culminated in September with a decision to dial back the electric vehicle rollout, and lower long-term margins to over 10%. The stock has nearly halved since 2022. Before he pivots to a sole focus on Volkswagen Blume will try to push through a raft of cost cuts with labour unions. Such negotiations can drag out. In theory, though, Leiters has more time and a freer hand to turn things around. Just as well. Porsche is currently valued at 16 times 2026 earnings, double the level of premium peers like BMW BMWG.DE or Mercedes-Benz MBGn.DE, even though its 8.7% 2026 operating margin will not be far above theirs, as per Visible Alpha data. To stop the rot, Leiters may need to boost its luxury status by selling fewer cars, at higher prices. His stints at luxury groups McLaren and Ferrari RACE.MI should help. Unfortunately, Porsche’s CEO is still constrained. Only 25% of its stock is listed, and Volkswagen and Porsche SE PSHG_p.DE - the investment vehicle of the Porsche and Piech families - own all its voting shares. The latter also controls Volkswagen. Leiters also has to contend with labour representatives, who sit on half of the board. The question is whether this complex governance allows a new boss to take tough decisions. Ideally, Leiters would have scope to cut dividends to boost investment, or scale back production, if he wants to. In reality, his steering faces various potential obstacles. Follow @Unmack1 on X CONTEXT NEWS Sports-car maker Porsche said on October 17 that Michael Leiters would replace Chief Executive Oliver Blume. Blume will stay on as CEO of parent Volkswagen. Porsche, which has been hurt by falling sales in China and U.S. tariffs, on September 19 announced that it would delay the roll out of certain electric vehicle models, and lowered its long-term operating profit margin target to a “double-digit range” up to 15% in case of “good business development”. Leiters has previously been chief technology officer at Ferrari, and most recently was CEO of McLaren Automotive. Porsche still enjoys a rich valuation, despite its troubles https://www.reuters.com/graphics/BRV-BRV/xmvjezggjpr/chart.png (Editing by George Hay; Production by Streisand Neto) ((For previous columns by the author, Reuters customers can click on UNMACK/neil.unmack@thomsonreuters.com))