Porsche, the iconic German luxury carmaker, is undergoing a seismic shift in its China operations. Once the company’s largest single market, China has seen a steep drop in demand for Porsche’s vehicles, prompting the automaker to announce the closure of approximately 30% of its dealerships in the country by the end of 2026.
Streamlining for Profitability
Currently operating 138 dealerships across China, Porsche plans to reduce this number to around 100, focusing on strengthening its presence in high-performing regions like Shanghai and Beijing. According to Alexander Pollich, CEO of Porsche China, the decision is part of a broader strategy to consolidate and optimize the company’s operations in response to changing market dynamics.
“By the end of 2026, the number of Porsche Centers in China will be consolidated to approximately 100,” Pollich revealed during an investor call. “Our key purpose out of optimization is to improve the overall network profitability, resulting in a multi-win situation among Porsche, dealers, and customers.”
This network reduction comes as the company faces intensified competition from China’s booming homegrown electric vehicle (EV) brands and a decline in consumer appetite for foreign luxury cars.
Declining Sales and Rising Challenges
Porsche’s sales trajectory in China highlights the urgency of these changes. After reaching a peak of 95,671 vehicles sold in 2021, the company saw a 2% dip in 2022 with 93,286 units. In 2023, the numbers dropped further to 79,283 cars. The trend has worsened this year, with sales plunging 29% in the first nine months.
Pollich remained optimistic despite the challenges. “Amid the challenges of today’s market, we remain confident in the resilience of the market and are steadfast in our commitment to Porsche’s core values of sportiness and performance,” he said.
Support for Dealers Amid Closures
The planned dealership closures will be accompanied by measures to support the affected dealer partners. Porsche has committed to providing financial relief, trade-in assistance, and wholesale support to help ease the transition. However, the company has not yet disclosed which dealerships will face closure.
Embracing Digital Transformation
To adapt to evolving consumer preferences, Porsche is investing heavily in digital technologies for its remaining showrooms. Enhancements will include real-time vehicle production and delivery tracking via the Porsche app and WeChat, catering to China’s tech-savvy customer base. Additionally, the company is establishing a local technical division to develop features tailored to the Chinese market.
A Shift in Luxury Car Buying
China was Porsche’s largest market for eight consecutive years, but a shift in consumer sentiment is reshaping the country’s luxury car landscape. Domestically-produced EVs are capturing market share at an unprecedented rate, challenging established European brands like Porsche.
Despite these setbacks, Pollich reaffirmed Porsche’s commitment to China. “We never shy away from competition,” he said. “It is only sensible to adjust the dealer network. It will not only safeguard network profitability but also guarantee the luxurious and exclusive service to our customers.”
Looking Ahead
As Porsche navigates this critical transition, the company is doubling down on key regions while embracing digital innovation to stay relevant in a rapidly changing market. Whether these efforts will be enough to regain momentum in China remains to be seen, but the automaker’s commitment to adaptability signals its determination to remain a strong player in the luxury automotive sector.
