Company Reports

Porsche is uniquely positioned as a luxury car company with scale benefits, selling more than 10 times the volume of most luxury car brands annually, with about 63% of its volume at a price point above EUR 100,000 per vehicle. Despite its higher volume, its superior margins relative to its automotive peers reflect the brand’s continued value, thus warranting a narrow moat rating.

Porsche is uniquely positioned as a luxury car company with scale benefits, selling more than 10 times the volume of most luxury car brands annually, with about 63% of its volume at a price point above EUR 100,000 per vehicle. Despite its higher volume, its superior margins relative to its automotive peers reflect the brand’s continued value, thus warranting a narrow moat rating.

Porsche reported a robust improvement in profitability in the second quarter, led by a materially higher mix of its iconic 911 model and a lower mix of margin-dilutive battery electric vehicles, as well as lower one-off expenses. A weaker second half is expected. It maintained full-year guidance.

Porsche reported first-quarter revenue of EUR 8.4 billion, down 5% year over year, weighed by a 15% decline in global automotive deliveries. Operating profit fell 22% to EUR 595 million, with return on sales of 7.1% at the upper end of guidance.

Porsche is uniquely positioned as a luxury car company with scale benefits, selling more than 10 times the volume of most luxury car brands annually with about 63% of its volume at a price point above EUR 100,000 per vehicle. Despite its higher volume, its superior margins relative to its automotive peers reflect the brand’s continued value, thus warranting a narrow moat rating.

Porsche reported fourth-quarter revenue down 18% year over year, driven by persistent weakness in key end markets, particularly China, where deliveries declined 28%. Volumes are expected to remain under pressure in 2026, while operating margins should recover to 5.5%-7.5% from 1.1% in 2025.

Porsche reported an operating loss of negative EUR 966 million and an underlying operating profit of just under EUR 1.2 billion for the third quarter, implying an underlying margin in line with the company's medium-term guidance for a double-digit margin.

Porsche has cut its 2025 operating margin outlook to 0%-2% from 5%-7% as it effectively impaired research and development capitalized on a battery electric vehicle platform that is no longer being released. It also materially downgraded its longer-term margin goals to 10%-15% from 15%-17%.

Porsche is uniquely positioned as a luxury car company with scale benefits, selling more than 10 times the volume of most luxury car brands annually with about 65% of its volume at a price point above EUR 100,000 per vehicle. Despite its higher volume, its superior margins relative to its automotive peers reflect the brand’s continued value, thus warranting a narrow moat rating.

Half-year revenue, operating profit, and automotive net cash flow are down 7%, 67%, and 65%, respectively. Operating profit excluding tariffs, restructuring, and one-off impairments declined 31%. Full-year return on sales guidance was reduced again to between 5%-7%, down from 6.5%-8.5%.

Porsche is uniquely positioned as a luxury car company with scale benefits, selling more than 10 times the volume of most luxury car brands per year with about 65% of its volume being sold at a price point above EUR 100,000 per vehicle. Despite its higher volume, its superior margins relative to its automotive peers reflect the brand’s continued value, thus warranting a narrow moat rating.

The European Union and the US have reached a trade deal, setting the baseline tariff rate at 15% for imports from the EU, including autos.

Porsche has adjusted its 2025 guidance to account for costs related to the rationalization of its battery subsidiary, China weakness, supplier support, and the impact of US import tariffs incurred in April and forecast for May. Return-on-sales guidance has been lowered to 6.5%-8.5% from 10%-12%.

With clarification on US import tariffs affecting European automakers, which have relatively low exposure to US exports, we update our fair value estimates to reflect the tariff implications. We also revise our long-term growth assumptions for the European automakers in China.

Porsche is uniquely positioned as a luxury car company with scale benefits, selling more than 10 times the volume of most luxury car brands per year with about 65% of its volume being sold at a price point above EUR 100,000 per vehicle. Despite its higher volume, its superior margins relative to its automotive peers reflect the brand’s continued value, thus warranting a narrow moat rating.

On April 2, US President Trump reaffirmed the implementation of a 25% worldwide import tariff on all automobiles and automobile parts imported into the US, with the exceptions related to the United States-Mexico-Canada Agreement, as initially announced on March 26. The automobile industry will not be subject to the reciprocal tariffs announced on April 2. Thus, we reaffirm our estimate of a negative impact of between 20% and 30% on our fair value estimates for no-moat auto original equipment manufacturers resulting from these tariffs. Despite the downward revisions under this scenario, we continue to believe that there is a sufficient margin of safety at current prices, as shares trade at a significant discount to our valuations. BMW and Mercedes export approximately 50% of their US production, which may be affected by retaliatory tariffs, possibly increasing the negative impact on our fair values.

Narrow-moat Porsche delivered a weak set of 2024 results, largely attributable to a significant decline in sales across China, heavy product launch costs, and supply chain disruptions that hit the cost of sales.

Porsche is uniquely positioned as a luxury car company with scale benefits, selling more than 10 times the volume of most luxury car brands per year with about 65% of its volume being sold at a price point above EUR 100,000 per vehicle. Despite its higher volume, its superior margins relative to its automotive peers reflect the brand’s continued value, thus warranting a narrow moat rating.

The EU Commission released its automotive industry action plan on March 5. While we commend the flexibility provided for carbon dioxide targets, we think the remaining proposals lack details, timelines, and regulatory enforcement. The positive share price moves of the European auto original equipment manufacturers appear to reflect the reversal of expected CO2 emission penalties. We make no changes to our fair value estimates for the European automakers.

The European Union launched a strategic analysis on how to safeguard the future of the European automotive industry on Jan. 30. The results of this investigation are expected to be released on March 5. The investigation aims to provide the industry with support to curtail accelerating job losses and declining contribution to the European Union's gross domestic product. In contrast to the Chinese auto industry, which has soared because of a focused and coordinated regulatory framework, European policy has been contradictory and uncertain in particular areas. We believe European auto industry stocks are pricing in worst-case scenarios and therefore trading at deep discounts to their fair values. We see potential short-term and longer-term profitability improvements to result from a supportive and coordinated regulatory policy.