In recent years, China has become the world’s largest market for luxury goods, aimed at the middle and upper classes, precisely the type of clients who now cannot avoid the crisis that is ravaging the country. Thus, in the third quarter of the year alone, Porsche’s sales volume fell by 29% in the Chinese market, which contributed to a 41% reduction in profits. from the German manufacturer in the same period. And, given the scenario of continuous drop in demand in the largest market in the world, The German brand is preparing to close dealerships.
In the first half of the year, Porsche sold 33% less in this eastern country, falling from 43 thousand to around 29 thousand units. This placed China below the United States and Europe in category from this manufacturer, which justified the announcement that aims to “a significant reduction in the dealer network.”
According to Reuters, the tense Chinese economic situation is leading local consumers to avoid more expensive products, opting instead to buy goods with the value for money in mind. This led Porsche CFO Lutz Meschke to declare that “China is a big challenge for everyone, not specifically for us, and We cannot take for granted that this country will return to what it was for European brands.”. Meschke also stated that Porsche is preparing “to sell only 250,000 vehicles worldwide in the coming years,” far from the approximately 300,000 it sells annually.
Porsche is not the only one suffering from reduced sales of more expensive products, whether they have wheels or not, since the crisis cuts across the entire luxury market. Mercedes also faces a 17% drop in sales in Chinacompared to 2023. To make this situation worse, the Financial Times draws attention to the fact that The profit margins of these more reputable brands have also been reduced.since discounts and incentives have been implemented that consume companies’ profits to avoid a further drop in sales.
Source: Observadora
