Porsche is to cut more jobs after profits were largely cancelled out by a costly writedown on reversing its electric car strategy, as the luxury manufacturer also battled a prolonged sales slump in China.

The German carmaker appointed a new chief executive, Michael Leiters, on 1 January after four profit warnings last year that also contributed to it tumbling out of Germany’s DAX stock index.

“The streamlining of the company needs to be sharpened and this will lead to further job reductions,” said Leiters on Wednesday. Porsche employs about 40,000 people and has previously said it would make about 3,900 job cuts by 2030.

“We will streamline our management structure, reduce hierarchies and cut back on bureaucracy,” said Leiters, adding that more details would come in the autumn.

Porsche has struggled with rising competition in China, a key market for European luxury firms, where homegrown car manufacturers’ sales are booming. China accounted for about 15% of car deliveries, down from 18% the previous year.

Meanwhile Donald Trump’s car tariffs have also hurt its sales in North America. The company imports all of the vehicles it sells in the US – still its biggest market – where the tariffs cost it about €700m in 2025.

Porsche said total deliveries fell 10% to 279,000 cars, causing revenue to slump 12% to €32.2bn. Operating profit fell to €413m from €5.6bn the previous year.

Amid the crisis, Porsche is walking back on a once ambitious electric car strategy, resulting in a €3.9bn writedown – a balance sheet correction that acknowledges the cost of changing tack, rather than immediate cash losses.

“We are using the current challenges as an opportunity to act even more decisively,” said Leiters. “We will comprehensively reposition Porsche, make the company leaner, faster and the products even more desirable.”

Porsche’s torrid year also hit its parent company, Volkswagen, which warned it would need to make more dramatic job cuts earlier this week. VW said it would shed 50,000 jobs by the end of the decade, as it faced falling sales in China and North America.

Porsche has historically been one of the German car giant’s key profit drivers, boasting an operating margin of 14.5% in 2024 – compared to margins of between 3% and 6% for most carmakers.

Its operating margin slumped to just 1.1% last year, which it said could rise to 5.5% in 2026.

The company has been forced to delay several planned electric car models in favour of adding more vehicles powered by internal combustion engine, which are more profitable.

Those include electric versions of its Boxster and Cayman models, which are now expected to come in 2027 – hit in part by the bankruptcy of the battery manufacturer Northvolt. An electric SUV model, the K1, announced to fanfare in 2023, has also been pushed to around 2029, and is also expected to include hybrid and petrol options.

Earlier in the week, VW warned that global turbulence caused by the US-Israeli military action against Iran would would negatively affect its outlook. Porsche said the potential impact of the war had not been taken into account in its forecasts.