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Earnings Call Analysis

Porsche anticipates stronger Q4 driven by new models and improved availability.

In the first nine months of 2024, Porsche faced challenges, including a 12% decline in wholesale sales, resulting in revenues of EUR 28.6 billion, down 5%. Group operating profit was EUR 4 billion, equating to a margin of 14.1%. Despite weaker demand in China, order intake remains robust globally, particularly for the new 911 and Macan. Looking ahead, Porsche expects Q4 to improve significantly, aiming for a return on sales of 14% to 15% and a net cash flow margin of 7% to 8.5%. The introduction of the 911 GTS and E-Macan is anticipated to boost performance moving into 2025.

Navigating Challenges: Q3 Performance Overview

In the first nine months of 2024, Porsche faced a decline in both wholesale and retail vehicle sales, with a 12% decrease translating to over 221,000 units sold. This downturn is primarily attributed to supply chain issues and challenging market conditions, especially in China. Despite this, Porsche's average sales prices remained robust, with figures of EUR 115,000 for retail and EUR 117,000 for wholesale, underscoring a strategic shift towards value over volume. The group revenue for this period was EUR 28.6 billion, marking a 5% decline year-on-year, yet the company reported an operating profit of EUR 4 billion and an impressive margin of 14.1%.

Demand Dynamics: Global Order Book Strength

Despite facing headwinds, Porsche's demand for its products, especially the new models, remains encouraging. The order intake across most regions is strong, except for China, which has been a tough market. The new 911 and Macan models have generated significant interest, and the global order book extends well into 2025. Additionally, Porsche is seeing an uptick in revenue per vehicle through customization options, thanks to its unique offerings that appeal to customers desiring personalized vehicles.

Supply Chain: Disruptions and Strategic Responses

Porsche has been navigating significant supply chain disruptions, including limited parts availability and production delays due to changeovers for popular models. In Q3, supply constraints negatively impacted production capabilities but are expected to improve in Q4 with the launch of the new GTS version of the 911 and the E-Macan. As part of its ongoing strategy, Porsche is recalibrating and reprioritizing projects to enhance operational flexibility and resilience against ongoing supply challenges.

2024 Guidance: Optimism Amidst Uncertainty

Looking towards the remainder of 2024, Porsche is confident in achieving its targets with a return on sales forecast of 14% to 15% and a net cash flow margin of 7% to 8.5%. The projected improvements stem from anticipated increases in product availability and a favorable product mix in the coming quarters. However, the company remains cautious about the Chinese market, where challenges are expected to persist.

Financial Stability: Investment and Efficiency Focus

Porsche continues to prioritize investments in its product portfolio and digitalization initiatives, with over EUR 3.8 billion spent on capital expenditures and research and development. The company's net liquidity was reported at EUR 6.2 billion at the end of September 2024, allowing room for strategic investments while ensuring a robust financial position. Furthermore, Porsche aims to achieve cost efficiencies that could support profitability even with reduced vehicle sales volumes, targeting a sustainable business model around 250,000 cars annually.

Long-term Outlook: Adjusting to Market Realities

In response to the evolving market landscape, particularly in China, Porsche is reassessing its product range and cost structures. This shift includes potential adjustments in its model offerings, such as enhancing both electric and combustion engine variants to maintain competitiveness. While the immediate future reflects some uncertainty due to macroeconomic factors and regulatory conditions, Porsche is committed to maintaining high profitability and customer satisfaction through innovative approaches.

Earnings Call Transcript 2024-Q3

[Björn Scheib, executive]

Hello, and welcome to our analyst and investors call on the Q3 2024 results. My name is Björn Scheib; and with me is our CFO and Deputy Chairman of the Executive Board, Lutz Meschke. Today, we would like to give you a brief insight of our business performance in the first 9 months of 2024.

All materials such as the investors deck are available in the Investors section of the Porsche website. Before we begin, let me remind you that any forward-looking statements we will make during this call are subject to the risks and uncertainties mentioned in the safe harbor statement included in the Porsche materials. This intro will also be governed by this language.

With that said, I'd like to hand it over to Lutz.

[Lutz Meschke, executive]

Thank you, Bjorn. Thank you for joining us for our Q3 disclosure call. Today, we want to inform you about our performance in the first 3 quarters of 2024 and the rest of the year that lies ahead of us. Porsche has a strong foundation with an exclusive and individual brand.

We attract and inspire people from all over the world and across generations. Our customers, our product portfolio and our services are and will be our key assets. There's wide range of promotional drivetrains, attractive design and service offerings.

Reflecting the changing demand in China and the slower BEF transformation, we are reviewing our product offering, our ecosystem as well as budgets and cost position to even further increase our flexibility and resilience. Porsche is starting to recalibrate and reprioritize projects and products. And we also have a clear vision for software with first-class hardware, software and digital services, we create exciting experiences for our customers.

As my colleagues had outlined at our Silverstone event last week, this will not happen overnight. It will happen steady and incrementally. In 12 months, you will already see the first advances and momentum we'll build.

Before we take a look at our 2024 performance so far, let me say, like any race track, each year has lower and faster sectors. In the third quarter, we were slowed down and were a little slower. Now we can accelerate again and start the final sprint.

Our business year-to-date and in particular, in the last 3 months has been characterized by primarily 3 effects. First, our 4 product changeovers and ramp-ups, which have caused temporary gaps in individual markets and model series. From a quality and timing perspective, these are fully on track. And second, the disciplined management of demand and supply in the Chinese market according to our value of our volume strategy. And third, so relatively lower parts availability from our supply chain. This year, we have had to manage many supply chain disruptions due to the volatile environment.

Our team have been working continuously to mitigate potential supply shortage risks. For example, as one of many difficulties in our supply chain, the bottlenecks resulting from the flooding of a production facility of an important European aluminum supplier as of now, have been largely compensated. However, other risks in the supply chain still exist and need to be managed accordingly.

All of this significantly impacted our results. But as we have previously mentioned, this Q3 behind us, our performance is expected to improve from here. As already communicated, we delivered slightly above 26,000 vehicles to customers in the first 9 months.

On a wholesale level, this resulted in more than 221,000 units sold, a decline of 12% to previous year. With a share of 18% from China sales year-to-date, more than 80% of our global sales were from Europe, North America and overseas and emerging markets. We have a more balanced sales footprint than ever.

Let's now turn to the financial results. Group revenue in the first 9 months was EUR 28.6 billion, a decline of 5%. As mentioned earlier, this development is mainly reflecting the lower wholesale, also resulting from fewer vehicle availability.

On the other hand, we benefited from a better product mix. Pricing again was also positive benefiting from the price increases last year as well as the higher degree of individualization. Thus, we accounted for an under-proportional decline of group revenues compared to our vehicle sales.

Group operating profit was EUR 4 billion at a margin of 14.1%. The earnings per preferred share for the first 9 months amounted to EUR 3.04.

Let's now talk about our customer demand. This shows that we are very much satisfying our customers' expectations with our new models. Overall, in all regions, this exception of China, order intake stays encouraging. There's a strong mix and pricing. This trend is very much supporting our strategy of value-oriented growth.

Not to forget, the demand for the new 911 is as expected, quite satisfying, even above expectations, especially for the GTS. Also, the demand for the new Macan remains robust. Overall, our global order book stays strong, already reaching out well into 2025. The mix and quality of our order book nicely illustrates that our customers appreciate our exclusive product offering and very much make use of the opportunity to personalize their vehicle.

This we also recognize with the incoming orders for the new Macan. Here, we see an increase in the revenues per vehicle from individualization. Those of you who are more interested in our individualization strategy or our Sonderwunsch and exclusive manufacturing program can find more details in the deck from our Silverstone event on our website.

The average sales price on retail at the end of Q3 '24 was EUR 115,000. The average sales price on wholesales amounted to EUR 117,000. These numbers reflect our value over volume strategy and long-term trend. Automotive revenues amounted to EUR 25.9 billion year-to-date. The operating return on sales for automotive was 14.6%. The Automotive segment's operating profit in the first 9 months of 2024 was at EUR 3.8 billion.

We have outlined in our Q2 call, we had to deal with limited product availability after the summer break. This was a function of the product changeovers and ramp-ups to relatively lower parts availability from the supply chain and the production summer break in Zuffenhausen and Leipzig in August.

On the cost side, we still face higher material costs from the inflationary environment in our supply chain. The regular quality and customer satisfaction as well as CO2 initiatives. Plus the inflated start-up costs in connection with the renewal of the model range, resulting from higher D&A on capitalized R&D and CapEx.

We also accounted for higher sales and marketing expenses resulting from our digitalization strategy. Motor sports as well as higher costs for strengthening our customer-oriented services. The seasonal lower product availability triggered in Q3, a very unfavorable fixed cost coverage. As discussed earlier, we will continue to inspire our customers with a very young and attractive product portfolio as well as with iconic and emotional sports cars.

In order to further achieve even more in the segment and to further advance our strategy of value-creating growth, we stay committed to a combination of 3 types of powertrains. Efficient, ICEs, exciting plug-in hybrids and innovative all electric models. Thus, we spent more than EUR 3.8 billion on CapEx and research and development year-to-date.

Capitalized R&D amounted to around EUR 1.6 billion this year so far. D&A of capitalized development costs amounted to more than EUR 800 million. Thus, the expense of R&D was EUR 0.5 billion higher than last year, equaling around 6% of automotive revenues. Last year, it was 3.9%. Automotive EBITDA year-to-date was EUR 5.95 billion, corresponding to an automotive EBITDA margin of 23.0%. This year, we have earned an automotive net cash flow of EUR 1.2 billion so far.

The net cash flow is mainly the result of the following 4 factors: first, the cash flow from our operating business, which we outlined before; second, higher working capital resulting from temporary effects, mainly in connection with the launch of the new Macan and other vehicles; third, the continued disruptions in our supply chain and elevated cash flow from investing activities, which reflects our continued spending on the development of our brand and ecosystem; fourth, the cash flow also includes our investments in partnerships for the digitalization of our vehicles from Q1 2024.

Here, we invested a mid-3-digit million amount in digital and software partnerships. You can find more information on the automotive net cash flow in our quarterly reporting.

Financial Services revenue amounted to around EUR 2.9 billion in the first 3 quarters. The operating profit of the Financial Services segment was EUR 210 million. As in the last 2 quarters, the result is mainly driven by the valuation of interest rate, hedging transactions and derivatives outside hedge accounting in the context of regular refinancing activities.

Overall, the credit quality of our financial services book is unchanged and very strong. At the end of September, our automotive net liquidity was at EUR 6.2 billion.

Let's move on to the outlook for 2024. As already discussed in the Q2 call, reflecting our robust order book and improved availability of our product offering and the expected drivers supporting the sequential improvement in Q4, we confirm our full year '24 return on sales outlook of 14% to 15%.

Our forecast for the automotive segment is an EBITDA margin between 23% and 24%, and a net cash flow margin in the range of 7% to 8.5%. This range includes our continued investments in the upcoming product portfolio, digitalization, brand and other strategic projects and partnerships.

In the remainder of the year, we will also continue with a stringent but flexible execution of our strategy. We will continue our investments in our ecosystem to boost the quality of customer service and ultimately, the Porsche brand.

Since the beginning of the year, we have been boldly forging ahead with our product offensive. With the new Panamera, Taycan, Macan and 911, we are putting ourselves in a strong position for the years ahead to exploit our structural growth potential.

At the same time, as outlined earlier, we have to deal with many supply chain disruptions. The current environment also shows that we have to be prepared for supply risk beyond our influence. Stringent to our value over volume strategy, we will consistently focus on aligning demand and supply. Specifically, in the Chinese market where challenges persist.

Based on the most recent global developments, we have to remain attentive to tariff, regulatory and macro risks on our business, which are outside of our control. We expect to have more clarity on these factors when we publish our full year '24 results. Here, we will also communicate our full year '25 outlook.

At Porsche, we take challenges as an opportunity to accept. Porsche is switching to sport mode to further boost our resilience and to be able to better counter global uncertainties. This will provide us with a strong foundation for the years to come.

Before we come to the end, one more statement on our capital allocation strategy. Based on our strong industrial net liquidity and the generated cash we intend to strengthen our balance sheet by partly funding our pension plan. Our commitment for a dividend payout ratio of 50% of net profit midterm stays unchanged.

Thank you very much for your attention.

[Operator]

Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the analyst and investor call regarding the Porsche AG Q3 2024 Results. This call will be hosted by Lutz Meschke, Deputy Chairman and member of the Executive Board for Finance and IT. Since you have been provided with in statement in advance, we will jump directly into the question-and-answer session. [Operator Instructions] And now I would like to turn over to Bjorn Scheib, Head of Investor Relations. Please go ahead, sir.

[Björn Scheib, executive]

Hello, and welcome to all of you for our Q3 conference call. I'm quite happy to have Lutz Meschke, our CFO and Deputy Chairman of the Executive Board today with me to answer your questions.

Before we start, as you all know, the safe harbor statement, or materials such as the investor deck or the Q3 report are available in the Investors section of our website. And before we begin, any forward-looking statements that we will make during this call is subject to the risks and uncertainties mentioned in the safe half the statement included in our materials.

Now before this, we now give the first queue in the queue. The first one is George of Goldmans, and the second is then Tim of Deutsche Bank. George, please go ahead.

[George Galliers-Pratt, analyst]

The first question I had was just with respect to demand. Since you lost [indiscernible] from a large number of players across the sector due to weaker demand. Can you comment at all in terms of what developments Porsche has seen with regards to demand over the course of Q3 and as we look forward to Q4 and the first half of 2025?

The second question I had was with respect to the supply chain and the product launches. I think you always described this year as being v-shaped, and it feels like Q3 is the bottom of that v. How comfortable are you with your suppliers as we think about the fourth quarter and the ramp of the new products into next year?

And specifically, VARTA and the cause you to issue the profit warning back in July. Where are you with both of those names?

[Lutz Meschke, executive]

Yes. Thank you, George, for your questions. Let me start with the demand situation and the product availability situation for the fourth quarter now. As expected, we have seen a quite weak third quarter due to the model changeovers for the 911 and the Macan, which -- mix, which is not very satisfying for the 911 because the GTS will start now in the fourth quarter. And therefore, we expect also with the new E-Macan in addition a better fourth quarter compared to the third quarter.

And yes, we are quite sure that we can reach our outlook for '24 when it comes to return on sales call of 14% to 15% and also our net cash flow margin corridor of 7% to 8.5%. When it comes to order intake, we have a quite robust situation, except of China.

We have already spoken about the situation in China, yes, several times, the situation is still very challenging. First of all, when it comes to the BEV segment, and we cannot expect a significant recovery in the upcoming years when it comes to the BEV segment, the luxury, the premium and luxury web segment in China for the European OEMs.

But what's very important for us is the strong demand over the entire model range in the other world regions. And therefore, we are -- yes, absolutely confident that we will see a better year '25.

We have a much better product availability, also a better mix when it comes to the 911. The GTS will start now in the fourth quarter, and then we will have a very steep ramp-up curve in the first half of '25. And in the second half of the year, also the 911 Turbo will start with the better results from at from the technology point of view. It's the bettery cell is very stable.

Now we are in the industrialization process. And the ramp-up of works quite well so far. And therefore, yes, we are sure that we can achieve our 911 mix for the fourth quarter, which we have expected also a couple of months ago. And as already mentioned, in 2025, this situation will be much better when it comes to the 911 mix and the entire product availability also for the E-Macan in the different world regions.

You asked for the situation in our supplier base. It's still very challenging. The flooding of the Novelis plant could be handled quite well. There is no significant damage in our production capacity happened in the last week. But on the other hand, we have seen additional challenges, other suppliers.

And therefore, in general, I can say it's still a very challenged situation to get the entire supply chain stabilized. But when it comes to the battery cell, we are quite confident that we could, yes, solve all the residual items in order to make the steep ramp-up curve.

[Björn Scheib, executive]

Very good. Thank you, Lutz. The next one in the row then would be Tim of Deutsche and thereafter, we have Jose of JPMorgan.

[Tim Rokossa, analyst]

Yes. Can we just follow up to what you just said on the 911, given the importance for the mix next year? So the GTS in Q4, and then which other versions do you progressively get throughout next year? And when will you be done with the full ramp-up for the 911? That would be the first question.

And then the second question, I obviously curiously noticed your comment in the presentation deck that says reflecting the change in demand in China and slower BEV transformation. You are reviewing your product offering, the ecosystem and the budget and cost position. Is there anything that you can already tell us about this, specifically when we think about future models like the K1, for example, when we think about your cost position, how will you address this? When can you tell us more about that?

[Lutz Meschke, executive]

Yes. Thank you, Tim. Let me start with 911 question. Now we start with the GTS in the fourth quarter, then the ramp-up curve in '25, and we will also start we see a production of the 911s. It's so-called normal combustion engine without the battery sales from [indiscernible] And then in the second half of '25, also the 911 power, will start with [indiscernible] cell on board. And yes, therefore, the mix for the 911 will be quite satisfying next year.

Your second question, yes, our cost structure is under review. And of course, yes, the potential ramp-up cost for the BEV transition is changing, yes, significantly, not only in China but only -- but also in the states and in Europe. We have seen challenging situations in China, we see, of course, a steep ramp-up cost for the BEVs, but there is still missing luxury segment within the BEV segment in China. Therefore, it's challenging, not only for Porche, but for all the European OEMs, which are playing in premium and luxury segments.

And in the rest of the world in the states and in Europe, we see, yes, a slowdown in the BEV transition. And the customer demand is, yes, not satisfying overall. And a lot of customers, first of all, in the premium and luxury segment are looking in the direction of combustion engine cars.

There's a clear trend right now in this direction. First of all, when it comes to luxury cars. And of course, we have to find the right answer on this situation, and therefore, we will react also in our product cycle. We will refresh also our combustion engine cars. For instance, the Panamera and the Cayenne.

And of course, we will rely also in plug-in hybrids and also on our electrified cars. I mentioned already that we are very flexible when it comes to our production footprint we can produce combustion engine and plug-in hybrids and electrified cars in 1 production line in Leipzig.

And when it comes to research and development, then you will see also flexibility in the upcoming years in the direction that we will develop also new combustion engine derivatives in order to give the right answer to the customer demand in the different regions.

[Björn Scheib, executive]

Very good. The next one then will be Jose and after Jose, we have Patrick of UBS.

[Jose Asumendi, analyst]

Thank you, [indiscernible] and Lutz. Couple of questions, please. I was wondering if you could give us some indications towards the pickup in deliveries when we think about the fourth quarter versus the third quarter? And which regions do you expect to contribute to this growth into year-end?

And second, I'd love to understand a little bit better, obviously, protecting pricing power, you're showing strong pricing power across a lot of the vehicles, as we have seen also in the last presentation you did where you flagged a different cars along the market.

I would like to understand a little bit better how much are you adjusting the fixed cost base to the lower level of deliveries, which in turn is also protecting pricing power? Any actions you have already taken and which action should we expect from Porsche in the coming quarters?

[Lutz Meschke, executive]

Yes. Thank you, Jose. Let me start with the deliveries for the fourth quarter. Of course, we will see a much better fourth quarter compared to the third quarter. due to the better product availability. I mentioned already the 911 GTS, but also the E-Macan will be in place now in the fourth quarter, and therefore, it will be a much stronger quarter compared to than quarter 3. And that will lead us in the direction of our forecast return on sales corridor of 14% to 15%, and the net cash flow margin between 7% and 8.5%.

And second question is going the direction of a new cost structure. We already addressed that we want to, yes, keep our organization healthy in the future. And it's part of our DNA that we try to improve our processes every year.

And in addition, as the right response of the challenges in the Chinese markets and the trend in the Chinese market we are proactively driving our company in a cost structure, which gives us certainty to be high profitable also with car sales of just 250,000 cars per year.

And that will be reflected in every cost position in all the fixed cost position. We have clear targets for reactions over 10 points. And of course, you will see it also in our research and development and CapEx ratio in the upcoming years. You will see, yes, significant reduction when it comes to research and development costs.

[Björn Scheib, executive]

So the next one then will be Patrick. And after Patrick, we have Horst of Bank of America.

[Patrick Hummel, analyst]

Yes. Thank you. Good evening. 2 questions also from my end. So you no longer expect the 17% to 19% corridor to be reached next year or at least you kind of withdraw that as an official statement. I want to understand is that just due to the uncertainties around U.S. elections, et cetera, et cetera?

Or do you already see today that basically, on the maybe weaker EV demand situation, the China situation that '17 to '19 is no longer achievable. And actually related to this, is it actually just gone for good because, obviously, there are headwinds that have come up that won't go away quickly?

And my second question, related to the volume outlook, you I think, still expect positive volume growth next year. Now as we look at the China situation, it might yet be a down year. The E-Macan, what we hear in North America, Europe -- sorry, North America and China doesn't look that great either. I'm wondering how to square your comments on the one hand that you want to be highly profitable at 250,000 units. And on the other hand, you're still striving for volume growth next year, which might not even be the right thing to do given the issues around the E-Macan and price pouring and demand situation in those regions.

[Lutz Meschke, executive]

Yes. Thank you, Patrick. Let me start with your first question. Yes. But please understand that at the moment, we will not communicate any expectations for 2025. As already mentioned, we are in a very challenging situation in the automotive industry, not only in the automotive industry, but also when it comes to geopolitical topics, the discussions about the election in the U.S.A., potential tariffs, other regulatory measurements.

It's yes, very difficult to give a clear outlook for the upcoming years because all these topics, which I mentioned are beyond our control, and therefore, please understand that we cannot give an outlook at this point in time for 2025.

When it comes to volume next year, then we will see a quite flat situation due to the situation in the Chinese market. We cannot expect a recovery when it comes to our sales figures in China in the upcoming year. But on the other hand, we see, of course, a very positive mix when it comes to the 911. I already mentioned the GTS and the Turbo models and also the E-Macan will be available in all the different world regions. And therefore, yes, we can expect sound sales situation in general, also in 2025 despite the challenged situation in China.

[Björn Scheib, executive]

Very good. The next one then is Horst. And after this, we have Anthony from ODDO. And then we have 1 -- 2 more after this, and then we have Anthony -- sorry, Horst and then Anthony.

[Horst Schneider, analyst]

6 Yes. Hope you can hear me. It's Horst here from Bank of America. I would have 2, please, as well. The first one is again picking up the weaker bat sales, and we get always an impression that you are quite flexible in the desk sales. You can do more, you can do last year full emissions with Volkswagen.

I'm asking myself in that context, always how flexible are you regarding the CO2 emissions because if you sell less bets, then your CO2 emission profile is higher, and I think Volkswagen is not paying for free. I mean it's kind of internal calculation then, but since you are now separately listed, I would assume that you have to pay something.

So maybe you can explain this procedure, how that works. If you need to compensate Volkswagen if your CO2 emissions are higher, that would be great number one.

And number two, I try it, but I know it's a difficult question. with regard to U.S. election. So in case that there comes a situation when tariff is going to be raised, and you don't have any U.S. production.

Do you have really any contingency plans for such a scenario? What can you share at this moment? How would you act on that? Or it's for you just too early to tell, and you want to wait until that really happens. But anything that you can provide regarding U.S.A and potential tariffs will be great, at least maybe you can say what is your exact -- or not exactly, but roughly you your U.S. revenue exposure.

[Björn Scheib, executive]

Thank you very much, Horst, for this golden bridge. As I said, our crystal ball is not better than yours. This is obviously the million-dollar question right now. If we would have knowledge about this. We are quite sure this would be market-sensitive information we are not allowed to share.

Now without joking, please understand. This is our Q3 conference call of Porsche. And as such, we don't want to speculate about any political outcome from the U.S. election as such. This would be neither to the benefit of yours nor to the benefit of us Therefore, Lutz now obviously will rather stick with the CO2 questions.

[Horst Schneider, analyst]

Okay.

[Lutz Meschke, executive]

Yes, you already mentioned it, Porsche is part of the emission pool of the VW Group, and we are not separately assessed. And therefore, we have clear goals within the VW Group for the different brands. And as I mentioned, also Porsche takes part in this group.

And of course, our product portfolio for the upcoming years is clearly steered in the direction that we will meet these targets for Porsche. But nevertheless, of course, at the end, once in counts and that's the customer demand.

And therefore, we are prepared to fulfill our targets, but the customer has to accept it also that we are running just in 1 direction, in the direction of electrification. And therefore, my personal opinion is that we should be more flexible in the future to reach CO2 targets that we should work technology open, but that's to address in the direction of the government. It's not part of your question, but we are prepared to fulfill the targets we will see.

But at the end, we are part of the VW Group and if you are not able to fulfill the targets, then of course, we have to pay the bill also as Porsche.

[Horst Schneider, analyst]

Okay. Maybe can I try this a follow-up just because I couldn't ask a U.S. question. any comment on E-Macan order situation. I get the feeling it's maybe not as great as you wanted, but you shared until April some numbers on the order intake. Can you also share at this point of time, some numbers on order book?

[Lutz Meschke, executive]

No, we don't want to share our order book due to competitive reasons. But it's still a very robust order intake situation, except of China.

[Björn Scheib, executive]

So the next one then will be Anthony and then it's Henning and then it's Stephen. And obviously, after this, we are done and full with the list.

[Anthony Dick, analyst]

The first one for me is on China. I think you mentioned China was 14% of your wholesale in Q3. I was just wondering if this is -- if you consider this to be now a normal a satisfying level, basically, considering the level of demand in the market? Or if there's also some difference between wholesales and deliveries that we should take into account?

And then on that new level now that you're doing in China, you mentioned a couple of times now, the need, the requirements at just the dealer network in the country. Could you just update us on how that's going? And what kind of costs could that incur to Porsche. I don't know if you had any supplier dealer compensation story in Q3? And to what extent that impacted results and could impact us going forward.

[Lutz Meschke, executive]

Yes. China is in '25 expected to be on a similar level than in 2024. Of course, our dealer network and also our wholesale organization is more oriented in the direction of sales figures towards 100,000 cars a year. And therefore, it's right that we have to rightsize our dealer network. We are in the starting phase right now.

And of course, we will also have an impact in our own wholesale organization. And yes, we are just in the starting phase, but we expect a significant reduction in our dealer organization and also in our wholesale organization.

[Björn Scheib, executive]

Very good. The next one then we'll be Henning.

[Henning Cosman, analyst]

Yes. Horst tried on Macan way. Maybe I could try on some angle if you could maybe just conceptually speak a little bit, you said flat volume for 2025. We try and reconcile that you've mentioned a few times, you don't expect recovery in China.

The Macan is obviously a big part of the group volume, right, was historically in 80,000, 100,000 unit vehicle. I'm just trying to understand -- I'm trying to bypass the order book question, right? But how much do you think of that can be sustained in an electric area? Or with respect to your comments of potentially developing more PHEV and ICE variants, can we sort of conclude that you have now decided to develop the Macan ICE or PHEVs, et cetera? That's my first question, please.

[Lutz Meschke, executive]

Yes. I think it's very important to consider that we have a parallel offer in many markets with the combustion engine, Macan and the E-Macan. And therefore, despite the weak situation or the weakening situation in China, we are quite confident that we can reach our sales goals for the Macan in total.

We have very good order intake situation for the combustion engine Macan in the different markets and also for the E-Macan when it comes to Europe and the U.S. And therefore, yes, we are quite sure that we can reach our original targets when it comes to Macan sales in 2025.

[Henning Cosman, analyst]

Please correct me if I'm wrong, but I don't think we're aware of your sales growth. These are internal and you've never shared those. So that is still an element of big uncertainty in the client and sell-side base. Is that correct, unless you would share those, that would be great.

And the second question I had was on the 250,000 unit statement, why I think we're also trying to understand this one as well in the sense that do you want to lower the cost base to the point where at 250,000 units, you could achieve the original 17% to 19% margin corridor or the ultimately North Star, which was 20% at the time.

Is that the case? And everything that will come on top will help you further or the significant and profitable mean it's still outside, but it doesn't get worse if it were to go as low as 250? If you could just discuss your thinking around that again, please? Thank you very much.

[Björn Scheib, executive]

Henning, unfortunately, here, I need to step in again. Beyond what Lutz said earlier that the company is working in all areas, be it top line, be it product offering, be it at the same time, cost budgets and structures We, at the moment, stay pretty tight lipped because we have specifically said next year, we don't have a crystal ball.

We don't know around the framework, not though we want to speculate at the current stage about potential outcomes of this evaluation and the initiatives that we undertake because it's crystal clear that there are stakeholders involved. And this is a company that first talks to the stakeholders and then communicate with capital markets.

So thank you very much for your understanding on that matter. But that's basically what we can say as of today, but you see that the company works on it. Thank you.

[Lutz Meschke, executive]

Let me summarize. Of course, we want to increase our resilience at the clear goal behind the program. You will see continuous cost efficiency improvements, yes, in order to enable innovative investments in the upcoming years. The focus will be on the reduction of production and material costs, of course. And in addition, we will review also all the administrative areas, yes, it's very important that we optimize our internal cost structures in general.

[Björn Scheib, executive]

Thank you very much. And as the last in the row, now it's Stephen of Bernstein.

[Stephen Reitman, analyst]

Two questions, please. You talked about E-Macan on your BEVs, but could you talk about the Taycan briefly. We've obviously in the Phase II, where is it in terms of its market launch because maybe still the year-on-year comparisons are still very, very poor with a decline of 39% in the third quarter, 52% decline in the first half?

My second question is, maybe I missed a briefing the news about the 911 Turbo with the hybrid [indiscernible] coming in the second half of 2025. And my -- I thought it was coming earlier than that. Have you -- are you able to keep producing the combustion version, the 992 Sport 0 versions to keep. So there's not a drop-off in 911 sales before you actually have the hybridized versions out.

[Lutz Meschke, executive]

If you mentioned it, the situation is the Taycan is very challenging also in 2024 due to the -- yes, first of all, due to the situation in China, the weak market situation in China. We had to adjust our production program for the Taycan.

And yes, it's a situation which is not satisfying because it's a fantastic car when it comes to, yes, provide content, when it comes to driving dynamics and also when it comes to the new software. It's -- yes, it's a huge step in the right direction compared to the first generation.

But of course, we have to -- yes, yes, convince our customers that we made our homework with the Taycan. You know we had a lot of, yes, guarantee situation, with the first generation. And yes, we need to, yes, earn again the trust of our customers when it comes to the Taycan. But the product itself, it's fantastic. And therefore, yes, we are confident that we will see a recovery for the Taycan in 2025.

And when it comes to your second question, the 911, I already mentioned that we will have also the 911 Turbo in place in the second half of 2025 and in the first half of 2025, you will see the 911S, a normal combustion engine. And therefore, you will see then the entire model range in place when it comes to the 911, except the so-called [ Zonda ] model.

[Björn Scheib, executive]

So thank you very much, Lutz. Thank you very much to all of you joining us on this analyst and investors call on our Q3 results. As you may have seen, we just distributed the invitations for the Icons of Porsche event, which is one of the most vibrant ocean supporters and loves event in Dubai at the end of November.

If the 1 or the other of you has the chance to join us, we have a quite interesting program down there, which also gives you a very good opportunity to come down to the heart of Porsche and see the love that our customers have for our brand and will enjoy it.

With this, to all of you, have a lovely evening, lovely afternoon and lovely morning wherever you listened in or joined us, IR for sure, stays at their disposal, stay healthy, and we speak soon. Bye-bye.