Porsche reduces dealer network in China due to shrinkage

Shortly after revealing that global profits fell 41% in the third quarter, Porsche will reduce the size of its dealership network in China due to lower sales and cost cutting.

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Like many other European brands, Porsche has struggled in China recently. In the first half of this year, its sales plummeted 33% from 43,832 units to 29,551 units. Taking into account the third quarter, Porsche sales in China fell by 29%. This is a worrying trend for the brand, as China was once its largest market but now lags behind North America and Europe.

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Porsche blamed its sales slump in China on the country’s tight economic situation and a local focus on value-oriented models.

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“China is an incredible challenge, not just for Porsche,” said Lutz Meschke, the company’s chief financial officer. “In the future, we can no longer assume that the Chinese team will return to the status of European players.”

Meschke added that China’s economic woes have limited luxury spending and said the brand needed to review its product lineup, budget and costs, “all to further increase our flexibility and resiliency,” he said. “We will not give up on the Chinese market, but we need to face the facts.”

Porsche has confirmed it will slash its dealer network in China and expects car sales to be stagnant in 2025 compared with this year. The company did not disclose how many dealers would be forced to close, but Meschke noted that the brand’s cost structure would be adjusted to annual sales of about 250,000 vehicles, rather than the more than 300,000 it has sold in recent years, Reuters reported. Thousands of cars.

Mercedes-Benz faces similar difficulties. The brand’s local sales are down 17% from last year, which is concerning as China will account for about a third of new Mercedes sales by 2023. The Financial Times noted that the brand’s profit margins were also affected because it had to offer incentives to encourage local sales.

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