Market demand weakened, as local car manufacturers in China competed with low prices, leading to a significant decrease in delivery volumes for German sports car manufacturer Porsche and American General Motors (GM).
Porsche announced on Tuesday (July 9) that global car deliveries in the first half of this year decreased by 7% compared to the same period in 2023, mainly due to a 33% year-on-year decline in the Chinese market.
As a subsidiary of Volkswagen, Porsche’s deliveries in China account for nearly 20% of its global deliveries.
According to Bloomberg, despite the introduction of multiple new models by the German manufacturer, demand in the Chinese market continued to weaken.
Meanwhile, the company saw a 6% year-on-year decrease in deliveries in North America, but deliveries in Porsche’s home market, Germany, increased by 22% to reach 20,811 vehicles.
Overall, Porsche delivered 155,945 vehicles globally in the first half of this year.
In recent months, Porsche’s performance has been deteriorating, with the first-quarter results being the worst since the company went public in September 2022.
Porsche indicated that this is likely the low point for the year, but due to China’s ongoing real estate crisis and economic softness, weakening demand, luxury car buyers are becoming increasingly selective in their consumption choices.
In April, Porsche warned that the introduction of new models including the electric Macan and updated 911 sports car would put pressure on production volumes and returns. Macan sales declined by 18%, while shipments of the Panamera sports utility vehicle decreased by a quarter.
Porsche expects a profit margin of 15% to 17% this year, with group revenue reaching 42 billion euros ($45.5 billion).
The manufacturer anticipates an increase in profit margin next year as the model lineup is refreshed.
Porsche is not the only foreign brand manufacturer experiencing a significant decline in delivery volumes in China. General Motors and its joint venture partner delivered 373,000 vehicles in the second quarter in China, a decrease of about 29% from the same period last year.
All brands of General Motors in China experienced a significant drop in sales: Buick deliveries were around 81,000 vehicles, lower than 136,000 vehicles in the same period last year. Chevrolet deliveries were close to 10,000 vehicles, down from 48,000 vehicles in the same period last year.
Meanwhile, the joint venture SAIC-GM-Wuling Automobile delivered 252,000 vehicles, compared to 286,000 vehicles in the same period last year.
General Motors and other U.S. car manufacturers have been steadily losing market share in China.
They are facing fierce competition from Chinese car manufacturers, many of whom produce a range of electric vehicles at prices far below their international competitors.