Ladies and gentlemen, thank you for standing by. Welcome and thank you for participating in the media analyst and investor call regarding Porsche AG's Q3 2026 results. This call will be hosted by Dr. Jochen Breckner, Member of the Executive Board for Finance and IT. During the intro statement at the beginning of our call, all participants will be in a listen only mode. After the intro, we will jump into the question-and-answer session. Anyone who wishes to ask a question may press star and one. At this time, it is my pleasure to hand over to Björn Scheib, Head of Investor Relations. Please go ahead, sir.
Thank you very much, and good morning to everyone. This is our media and analyst call of Porsche AG on the Q3 2026 results. My name is Björn Scheib, and I am the Head of Investor Relations, and with me today is Anja Wassertheurer, our Director of Corporate and Product Communications. Before our CFO, Jochen Breckner, will give you an overview of our business performance in the first nine months of 2026, just a couple of words on the procedure.
After the intro statements by Jochen, we will start the Q&A session with the analysts. Our separate Q&A session for journalists will be held in German and starts at 9:00 A.M. Central European Time. You can find further detailed information online in the Porsche Newsroom, as well as on the Investor Relations website. As always, we would like to remind you that all forward-looking statements are subject to the risks and uncertainties mentioned in the safe harbor statement in our documents. With that, I hand over to Jochen.
Björn, thank you very much. Good morning, everyone on this call. Ladies and gentlemen, warm welcome, and thanks for joining us today for our analysts, investors, and media conference. As outlined at our Capital Markets Day three weeks ago, we continue to execute our strategy, Sportwagenschmiede ’35, with clear focus and discipline. We are beginning to see the first benefits in our financial performance. We are sharpening our product portfolio and focusing on our core business. We are improving our cost structure and reducing capital intensity. We continue to sharpen our Focus on the Core business and have reached two important milestones. First, the divestments of our stakes in Bugatti Rimac and Rimac Group were completed in the third quarter. Second, a sale agreement and foundation of a strategic partnership for MHP has been signed.
At the same time, we delivered a solid operating result and generated strong net cash flow in the first nine months, despite the challenging market environment. Combined with a strong balance sheet, this gives us the financial resilience and the strength to continue executing our strategy with discipline. We confirm our outlook for the full-year 2026. Let me now turn to our financial performance in the third quarter and the first nine months of 2026 in more detail. Looking at the first nine months of this year, group revenue came in at EUR 25.3 billion, down approximately 6% year-on-year. While vehicle sales were lower, strong pricing and positive mix effects continued to support the quality of our revenues. This results in a significantly more resilient revenue development compared with unit sales.
This reflects the strength of our value over volume approach, our pricing discipline, and the quality of our sales mix. At the same time, our geographically balanced sales footprint continues to provide resilience across different markets. As you know, we have significantly reduced our exposure to China. This makes our overall business less dependent on developments from this challenging market environment. With the successful launch of the all-electric Cayenne, BEVs account for 22% of our vehicle sales year-to-date. Automotive revenues per vehicle sold increased to around EUR 126,000. This is an increase of approximately EUR 6,000 against last year. In addition, revenues in the financial services segment continued to grow. Ladies and gentlemen, you also know that we maintain to operate in a challenging cost environment. This is characterized by inflationary pressures, costs associated with a slower transition to electric mobility, and elevated development expenses and depreciation.
Despite these headwinds, we have made tangible progress on costs. The disciplined execution of our Push to Pass performance program contributed to a reduction in our underlying cost base. Turning to cost of sales. In the first nine months of this year, cost of sales declined by EUR 3.2 billion to EUR 20.4 billion. This development mainly reflects substantially lower expenses related to our strategic realignment. It includes the release of provisions following successful negotiations in connection with the realignment of our product strategy. This improvement was also clearly visible in the third quarter. Cost of sales declined by approximately EUR 2.2 billion to EUR 6.6 billion. Strategic realignment expenses amounted to around EUR 300 million, mainly related to the Zukunftspaket. Compared to this, in Q3 last year, the expenses in connection with the strategic realignment measures amounted approximately EUR 1.9 billion. Overall, we achieved a clear improvement in profitability.
For the first nine months, group operating profit reached EUR 1.7 billion, up significantly from EUR 40 million last year, resulting in an operating return on sales of 6.9%. This development was also reflected in our third quarter performance. Strong pricing and mix, improved cost of sales, and substantially lower strategic realignment expenses supported an operating profit of EUR 387 million and an operating return on sales of 4.8%. What is also important, we continue to deliver strong cash conversion, reflecting our disciplined approach to capital allocation and cash management. In the first nine months of 2026, automotive net cash flow increased significantly to EUR 2.5 billion. This corresponds to strong net cash flow margin of 11.3%, compared with 5.6% last year. This increase was supported by lower cash outflows from investing activities and, in particular, the proceeds from the completed Bugatti Rimac and Rimac Group transactions.
This strong cash generation continued in the third quarter. Automotive net cash flow increased significantly to around EUR 1.5 billion. This includes a net extraordinary cash contribution of around EUR 500 million, mainly related to the more than EUR 900 million from mainly Bugatti Rimac transactions. On the other hand, this was partly offset by cash outflows for the strategic realignment and pension contributions. Excluding these extraordinary effects, automotive net cash flow remained broadly in line with the prior year quarter.
This brings me to our capital allocation. We remain disciplined in our investment approach and continue to focus resources on strategic priorities. Year-to-date, CapEx amounted to EUR 1.2 billion, including around EUR 300 million of license payments to Audi, slightly below the prior year level. We also continue to manage R&D spending with discipline. R&D expenditures decreased to EUR 1.5 billion year-to-date, compared with EUR 1.8 billion last year. At the same time, we maintained our conservative R&D accounting approach with a capitalization rate of around 43% year-to-date. This continues to support the quality and sustainability of our earnings and cash flow generation.
This is fully aligned with the directions we outlined at our Capital Markets Day. Our strategy, Sportwagenschmiede ’35, is about stronger cash generation and a structurally more capital efficient business model. We are becoming more focused and disciplined in how we allocate capital. Let me be clear. This is not about investing less. It is about investing better. We will continue to invest in our products, technologies, and innovation leadership, but with an even sharper focus on value creation, capital efficiency, and returns. As a result, automotive net liquidity stood at EUR 8.2 billion at the end of Q3. With this, we see Porsche in a very strong financial position.
Our healthy balance sheet gives us both the resilience to execute our transformation and the financial flexibility to continue investing in Porsche's future. With that, let me turn to the outlook. Again, first and foremost, despite the continued challenging market environment, geopolitical uncertainties, and external headwinds, we confirm our guidance for the full-year 2026. Our guiding principle remains unchanged: value over volume. Vehicle sales are expected to decline significantly compared with 2025 due to several reasons. The phase out of the 718 and the ICE Macan model lines. Base effects, especially from the first full BEV Macan year, 2025. The impact of changes to U.S. tax incentives on demand for electric vehicles, as well as our conservative outlook for the Chinese market. Based on our current assumptions, second half volumes are expected to be broadly in line with first half levels.
At the same time, the ramp-up of the all-electric Cayenne is expected to drive a significantly higher BEV share in the second half of the year. We continue to expect the group operating return on sales of 5.5%-7.5% for the full-year. As I previously outlined, our profitability guidance includes approximately EUR 800 million-EUR 900 million of net extraordinary burdens related to our strategic realignment. With this, let us turn to cash flow. We continue to expect an automotive net cash flow margin of 5.5%-7.5%. This includes several extraordinary effects. First, around EUR 1.3 billion of cash outflows related to the strategic realignment. This includes the Audi license payment in the high triple-digit million euro range. Second, around EUR 500 million of pension contributions. T hird, around EUR 900 million of net cash flow relevant inflows related to the Bugatti Rimac transactions.
Together, these extraordinary items are expected to result in a net cash outflow of around EUR 900 million - EUR 1 billion. Now let me come to the end with the following conclusion. Overall, we remain firmly on track with the execution of our strategic and financial priorities. While the environment remains challenging, our focus is clear: strengthening profitability, improving cash generation, and building a more capital efficient Sportwagenschmiede. With that, after a short break, I look forward to your questions. Thank you very much.
Thank you, Mr. Breckner. Ladies and gentlemen, we will now have a short break. Afterwards, the Q&A session for the analysts and investors will start. Ladies and gentlemen, we will now begin the question-and-answer session for the analysts and investors. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Please press the star key followed by zero for operator assistance in case of any technical difficulties.
Participants are requested to use only headsets while asking a question. Please ensure that all other devices with which you may be watching the video stream in parallel are completely muted to avoid interference. In the interest of time, please limit yourself to one or two questions. As mentioned, anyone who has a question may press star and one at this time. With that, I hand over again to Björn Scheib. Please go ahead, sir.
Thank you very much. We will start the Q&A session with analysts, investors now. First in the row will be Tim Rokossa of Deutsche Bank, and next after Tim will be Patrick Hummel of UBS. Tim, the line is open.
Thank you very much, Björn and Jochen. Good morning. I have two questions, please. The first one will be on the Zukunftspaket. We are starting to see the moving parts on cash and cost, obviously. At the CMD, you indicated that you should expect decent progress relatively quickly. Can you quantify where we stand on the Zukunftspaket, particularly the headcount reduction? How much of the targeted savings is already secured? How much does still depend on further negotiations and executions? Secondly, very impressive free cash flow, obviously, today, even though some of us that had expected you to print a decent one were still positively surprised here. With the strong free cash flow and your liquidity situation, how should investors think about capital returns from here?
Especially, how do you balance the regular dividend and the participation of shareholders in proceeds of what you call M&A, such as Bugatti and Rimac, I mean, I am thinking about the potential for a special distribution, obviously, here. Thank you very much.
Tim, thank you very much for the two questions. Let me answer them in the order that you have raised these two points. First one was on the Zukunftspaket and the question how we progress with the reduction in our workforce and the headcount. What I can confirm here again is, as we have also communicated and confirmed on the Capital Markets Day, is that the development of headcount reduction is completely in line with our expectations. The programs that we have set up with regards to partial retirement and also the mutual termination agreements are well on track. A reduction is going on as we have planned it, and we do not see any risk that we will not fulfill our targets that we have defined.
You might remember we communicated that we will reduce our workforce by, in total, 9,000 full-time equivalents by 2032, and that is still the target and will be achieved. On top of that, no additional negotiations are needed for that one. If I got the second part of your first questions correctly, this is all in line with the Zukunftspaket. The Zukunftspaket is signed, and as I said, we are already executing and progressing quite well on that one. A second question was on capital returns, given our very strong net liquidity and also the very strong net cash flow that we had in Q3, including the M&A proceeds from the Rimac Group and Bugatti Rimac. With that, I confirm what we have also communicated on the Capital Markets Day.
We've updated our dividend policy from around 50% dividend payments of the net proceeds based on IFRS on our group results to more than or at least 50%, to be precise. This is what we are targeting. We have not yet defined the dividend payment for the full-year yet. This is something that we will discuss with the corporate bodies and then suggest to the Annual General Meeting in spring or early summer 2027. From today's perspective, we think that this will be in line with the updated policy that we've communicated on the Capital Markets Day.
Thank you very much.
Next in the row is Patrick Hummel of UBS. After Patrick, we will have José Asumendi of JP Morgan.
Yeah. Thank you, Björn, and good morning, everybody. Good morning, Jochen. Two questions also from me, please. First one, starting with the full-year guide and what's implied for the fourth quarter. I think for revenues, you said already that you expect a result at the lower end of the range, which would still be close to EUR 10 billion of revenues in the fourth quarter. A substantial improvement quarter-over-quarter. If I take the midpoint of your EBIT margin quarter for the full-year, you would make only 5.5% margin on that relatively high revenue number. Is there anything on the cost front that we should be aware of? I think you're guiding realignment costs even a bit lower by about EUR 100 million than you did previously. If you could just elaborate a little bit on what's implied here for the fourth quarter.
Also, when it comes to cash flow for the fourth quarter, the underlying one should still be solid. I think cash R&D is a key contributor here because it went down a couple of hundred million year-over-year. Was that cash R&D of the third quarter an outlier, a positive outlier, or is that sort of the run rate from here? My second one, very simple. You launched Mission S concept, on the day somebody else has shown a flying car to the world, but I think you got still really, really good traction. Can you just share a little bit, qualitative feedback, and what that means for your thinking about the product launch? Thank you.
Yeah. Patrick, thank you very much. Also good morning to you. I start with the Mission S, a fantastic vision model that we've communicated on the Capital Markets Day and then presented it to the worldwide audience two or three weeks ago in New York at a historic place. That car received really overwhelming feedback from all the stakeholders and groups that we were targeting with that car. From our perspective, that vision model is in terms of design, in terms of positioning of the brand, a great proof point for our strategy, Sportwagenschmiede ’35. Also the feedbacks we received from our customer groups is, as I said, really overwhelming. Most of these guys ask for the piece of paper where they can sign a purchasing contract, which is not possible yet, of course, since that car is not decided.
It's still a vision model and a design model, but it received really fantastic feedback, and we are really happy with the feedback we received since then. Now, on your first questions on financial performance. We confirmed the outlook for the full-year, as I said, 5.5%-7.5% return on sales. We are just above the midpoint with 6.9%, as per Q3. This year, again, has a lot of, as you said, moving parts in terms of extraordinary expenses that we had. Indeed, in Q4, we expect additional expenditures, both for the Zukunftspaket, but also for the other line items that we have in the external expenses for the strategic realignment. That gives us a bit of a headwind so that we do not expect that profitability would increase for the full-year.
As I said, we will be really in the corridor between 5.5% and 7.5%, and no surprises are to be expected there. Cash R&D was the second part of the question. That was quite positive until Q3 and also in Q3. We usually see a bit of a hike and increase in Q4 with the year-end rally that we have is closing all the bookkeeping and the project work that we are doing. Therefore, that is not something that you should take as a performance for the fourth quarter and also into next year. As we said, we are still sitting on elevated strategic capital allocation in terms of R&D and also CapEx, 2026, 2027. The improvements that we are targeting based on our Sportwagenschmiede activities will kick in thereafter with the -20% to -25% that we are targeting for the midterm.
Maybe on top of that, what you have asked, what is also important, on top of cash R&D is our conservative bookkeeping that we have. I mentioned that in the intro statement. We are sitting at 43%, per Q3, of capitalized R&D, which is, compared to what we had in the past, quite conservative and therefore also shows that the bigger part of R&D is expensed and therefore, already included in our EBIT and return on sales as we communicated it today for the third quarter.
Very clear. Thank you, Jochen.
Thank you very much. Next in the row then is José Asumendi of JP Morgan, and he will be followed by Michael Tyndall of HSBC.
Thank you. Good morning, Jochen and Björn. Could you provide some comments with regards to the moving parts for 2027 so we can get a sense of the trajectory into next year? Second, strategically, when you think about manufacturing of vehicles across different plants, is the discussion still on the table to potentially move the Cayenne to Leipzig, or is this not currently in the discussions? Thank you.
José, thank you. On your first question into 2027, you were asking about the moving parts. Let me start with a more general and broader statement. As we communicate and as you know, we expect 2027 to be a rather transitional year. We recommend to rather look through that year, for 2028 and the years to come for the positive effects of our Sportwagenschmiede ’35 strategy to kick in. Why is that? Why is 2027 expected to be the trough? That is because of the holes that we have in our product portfolio. It will be the first full-year without the ICE Macan. Given other movements in the markets and the life cycle effects, we expect that 2027 will have lower volume than 2026. Given our contribution margins, that is definitely a headwind.
Now, on the strategic realignment expenditures, we will see improvements in 2027 compared to 2026. The most important part that we will still have there are the budgets for our Zukunftspaket and restructuring initiatives that we have. F or partial retirement, also for the mutual agreements for reducing the workforce. We expect EUR 300 million -EUR 400 million as a headwind and as a cost item in 2027. Now, moving from 2027 to the more specific question in terms of production footprint that we have, concerning the Cayenne, you are mentioning that one and also maybe potentially the additional SUV above the Cayenne, which is still under investigation. There is no final decision made yet. There are alternatives that we are evaluating. Of course, one of these scenarios is Bratislava, where the current model is manufactured, but also Leipzig could be an option.
We are still in the process of doing the math and see what would be beneficial for Porsche. We are in discussion also with the group and Volkswagen, since Bratislava is not our own factory, so we need to also realign on that question there. Decisions are still to be made, so the short answer would be, it is open, and we will communicate as soon as we have made final decisions on the location where we will produce the next Cayenne.
Thank you very much.
Jochen, thank you very much. Michael Tyndall of HSBC is next in row, and thereafter we are going to have Horst Schneider of Bank of America.
Morning, gents. Hopefully, you can hear me. A couple for me. I wonder if, Jochen, you can just talk through, you have closed quite a few businesses and sold a few businesses this year. What does that mean in terms of savings? Because I assume things like eBike, Cellforce were actually a drag on the P&L. How much of that do you get relief in 2027? The second one is more about your relationship with Audi. You are paying them for a platform, but if I am not wrong, they are going to be paying you for a platform. Where does that end up net-net once they have got the BEV platform, 718 platform? Is it still in their favor? Can you give us some steer as to where that whole thing plays out? Thanks.
Yeah. Michael, thanks for the first question. You are raising a very important topic. We closed some businesses that we have started as a Porsche Group, and we also sold off some subsidiaries and financial stakes that we had with Bugatti, with Rimac, and also with MHP, at least with the signing we had on MHP. All these initiatives come down to, say the sub-strategy that we have in the context of our Sportwagenschmiede, which is called Focus on the Core, which is very important. We want to reduce distraction and say kind of adventurous in other business opportunities that we had seen in the past and really focus on what is Porsche all about, Sportwagen, heritage, legacy, and convincing technology. These are first and very important proof points on that strategy, and that helps to focus Porsche and make it also a more profitable company.
When it comes to the relief in terms of cost items, you need to understand that we have baked those closures when it comes to eBike, but also, for example, the Cellforce Group and smaller companies that we had like Cetitec, into our special effects that we are communicating this year. The most important effect that you will see is that, the special effects will be lower in 2027. As I just said, with the other question from José, we will just have EUR 300 million to EUR 400 million remaining in 2027, and that is for the Zukunftspaket. That is a positive effect that you will see. Other than that, these companies were not really significant as they were still growing and being built, in the phase that they were at when we were closing them.
Of course, selling MHP when the closing happens, that would give definitely a relief on the cost items, since that was a fully consolidated 100% subsidiary of Porsche with more than 4,500 employees. There you will see the reductions in SG&A, but also in the cost of sales. Having mentioned that, just to be clear on that one, these 4,500 employees come on top to the 9,000 that we've communicated for reduction in general for making Porsche slimmer than it has been in the last year. On your second one, completely different topic, platform strategy, which really is the basis for a joint synergy generation and exploration between the brands, especially Audi and Porsche, but also in our case, we have synergy projects with Bentley, for example, and to some extent also Lamborghini. That's an important part for our financial model.
You're right, this goes in both directions. We are using platforms, modules, and technology from Audi, especially when it comes to our SUV cars. We will have elevated high cash spendings for the license payments for the next platform, for the successors of our Cayenne, for the potential additional SUV above the Cayenne, and also for the M1, the ICE Macan. On the other hand, we are offering our electric platform for the 718 Boxster and Cayman, which is about to be launched next year for an Audi project, they call it C-Sport internally, and we will get cash from their side. That payment is expected to come in at 2027, but what is important to understand is that that will be a much lower number than what we have to pay to Audi.
This is for the sole reason that what happens within the group is that you distribute the expenditures that are in the books and the platforms and the modules that we use from Audi are, say, much bigger and have a much bigger extent than what we are giving to Audi on the 983. Y ou should not think into high 100 millions or even 1 billion for the 983. It's rather a low three-digit number that we expect in 2027.
Brilliant. Thank you.
Okay.
Very good. Next in the row then, as said, is Horst Schneider of Bank of America, and he will be followed by Daniel Schwarz of Metzler.
Good morning, team, and thanks for taking my questions. Good morning, Jochen. I have got a few questions. First of all, related to deliveries and volumes. I still struggle with the forecasting of the volume outlook. The Macan phase-out, that slacked on your side, and I understand that impact. A side from that, when we look at the other model lines and we see recently some wealth deflation around the world, do you see any impact in your order book already on these wealth deflation trends? Take the Macan aside, we should expect for Q4 then higher volumes versus Q3 or rather flattish. The second question relates to tariffs. I know it's a delicate question and probably hard for you to comment on that, but it was always said that the entire Volkswagen Group is basically looking for a kind of tariff deal.
If Volkswagen adds capacity in the U.S., the entire group could get a kind of tariff exemption. Is that still under discussion? I know nothing has been announced, so therefore you can't say it's in the books, of course. Is there still a possibility that you get a tariff exemption if Volkswagen expands capacity in the U.S.? That would be the second question. The last one relates to FX rates. Because the dollar strengthened recently, and maybe you can again mention what are your assumptions regarding currencies going forward? Is this strengthening of the dollar is also base of your assumption? Thank you.
Horst, thank you very much. I start with the third question on the FX exposure and the development of the U.S. dollar lately. You are right, we've seen the appreciation of the U.S. dollar to 1.12, on some days even below 1.12, which is a positive development for our export-oriented business. What is important to understand, if you look for the midterm, we've communicated that for 2030, 2031, we assumed a rather conservative approach on FX rates, especially on the U.S. dollar, that it's quite early days to predict from the appreciation that we've seen today what will happen in 2030, 2031. That's one.
Second, based on the interest rate differential that we have, or difference that we have between the Eurozone and the U.S. dollar, even given the fact that we see this rather strong U.S. dollar during the last couple of days and few weeks, it is still not possible to hedge at these rates for our midterm business plan. T hese short-term movements are beneficial for short-term performance to some extent for the exposures that are not hedged yet. F or the midterm and the strategy, there is no change in what we have communicated on the Capital Markets Day with our midterm ambition of 10%-15% return on sales for the midterm, with the indication that from today's perspective, given this conservative approach on macroeconomic and especially FX assumptions, we expect to be in the lower bracket of that one.
Now, on your second questions, I do it in the inverse order. I hope that is all right with you, Horst, and everyone on the call. It was about tariff and a potential tariff deal of the Volkswagen Group that was debated around the time when the tariffs were imposed and implemented on the U.S. side. T here were a lot of discussions. There were some comments from the Volkswagen Group. A s then, we do not have any knowledge that there is something under discussion, that there will be something agreed and in our financial ambition midterm and also in our financial guidance for the current year and the indication that we are given for the next year, we do not expect that something positive happens. We are basing or putting our business model on the assumption that the 15% import tariffs remain in place.
Your first question was on the volume movements. We expect Q4 to be rather flat. There are some increases, some decreases in terms of model lines, but also in terms of the regions that we have, especially China remains a headwind. You know that we reduced the volume there substantially following our value over volume strategy, stabilizing the business. This is also something that we expect for 2027. It is a second reason next to the ICE Macan, that we expect that 2027 will have a lower volume. What is important is the 911. We still see a very strong demand on that icon of our business model. Still very strong. We still have waiting times that are in line with our strategy, and this gives us really a robust order bank.
Also, the Cayenne Electric, especially in Europe, where we see a positive trend into the electric mobility, is received very well by our customer base.
Okay. Just one small follow-up. If the currency rate stays where it is at the moment, would that be a headwind or tailwind in 2027?
That would be a small tailwind.
Small tailwind? All right. Thank you.
Next in the row, as said, is Daniel Schwarz of Metzler, and he will be then followed by Henning Cosman of Barclays.
Thank you for taking my question. I had one more question on 2027. T he volumes are seasonally low in Q3, and you had above 8% underlying EBIT margin. With around 56,000 units wholesale in Q3, would you say the Q3 capacity utilization is near to what you are expecting for 2027? The second question would be on the Cayenne production. You said that is still open. Is it a possibility or an option to produce Cayennes in the Audi factory in the U.S., if and when they have a factory in the U.S.? Lastly, expensed R&D, you mentioned it, relatively low in Q3. If I understand right, you expect higher cost in Q4. Is that relatively low in Q3 or also up year-over-year? Could you remind us, is it also going to be a headwind in the P&L in 2027?
Yeah. Daniel, thank you very much. Three questions. I start with the first one. 56,000 wholesale units in the current quarter, and you were asking about a bit of orientation into 2027 and also what that means in terms of capacity utilization in our factories. 2027 will be lower in terms of volume than what we expect for the full-year 2026. The sales that we have seen in the third quarter, if you do the easy calculation and multiply that by four, that could be something that would be even a bit higher than what we expect for next year, given the effects on our portfolio, given the effects that we expect in the various regions, especially in China. These effects give us also a bit of a headwind in terms of capacity utilization and also in terms of fixed cost absorption.
Therefore, also when it comes to profitability and EBIT, 2027 is expected to be lower than 2026. In terms of our strategy for improving our business, again, this will be the transitional year and the trough when it comes to the plan that we have. Second question was on the question whether Cayenne could be produced. We also already debated in this call, Leipzig versus Bratislava. I commented on that one. You were adding to the question whether it could be an option for us to produce the Cayenne in the United States in an Audi factory, in case they invest into one. That is something that first, I want to say that we do not comment on the plans of what Audi is doing. W hether there will be a factory or not is something that is not for a discussion in this call.
I f we would assume that there would be a factory, we still believe that this would not turn out into a business case for Porsche to move our production into the United States. Because even in such a scenario, it could be synergetic to use a joint factory. It is still adding complexity to our business. We would still have engines and other parts that we would need to export into the United States. We would have double investments when it comes to suppliers, etc. Given our rather small volume and high complexity, also in terms of individualization, that is something that from today's perspective, we do not take into consideration. The last question you raised were on expensed R&D. We are heavily working on R&D efficiency. That is one of the major pillars of our cost improvement programs under our strategy Sportwagenschmiede ’35.
We are executing on that one. We are increasing the development speed, maybe not up to China speed, but we will have an R&D process which is substantially faster, and therefore in terms of timing, shorter than what we have today. This will help to improve our R&D. 20% is the target that we have for a specific car project under R&D, where we want to see the improvements in the midterm. On the other hand, we are in the process of updating our portfolio. We are adding cars, again, back to the portfolio, like the ICE Macan. We are in the first phases of investigating into the additional SUV on top of the Cayenne. Other cars need to have updates, either on the technology side, on the platforms, but also in terms of what we offer to the customers.
Therefore, it's a combination of improving R&D costs per vehicle project on the one side. On the other side, we have a quite intense program to develop in our R&D center in Weissach. Therefore, we expect elevated levels in 2026, also in 2027, and the improvements will kick in thereafter.
Jochen, thank you very much.
Thank you.
Next in the row will be Henning Cosman of Barclays.
Yeah. Morning, everybody. Hi, Jochen. Hi, Björn. Jochen, I think you just touched on it already, but I just wanted to bring up the topic of consensus again. We are talking about trough in 2027, getting into the bottom end of the 10%-15% by 2030, 2031. Yet, in the context of that consensus that your team kindly populated into the Q3 print now, I think we are still at about EUR 2.2 billion EBIT, 6.5% margin next year. We are at 10% consensus margin for 2029 already, so basically two years before your 2030, 2031 language from the Capital Markets Day. I suppose we sort of get the trough language for 2027, but it is not consistent with the current consensus. I just wanted to ask if you might address this one more time now, just so we are all on the same page.
Yeah. Henning, it is not guidance time for 2027. We will have our forecast report in our press conference for the annual results 2026 in March 2027. There, as always, we will give a precise guidance and a precise range of what to expect in 2027. You need to understand that we cannot disclose specific numbers at this point in time, not only for formal and process reasons, but also because we are still in the process of doing the concrete budget for 2027, with all the effects that we need to bake in and with all the initiatives that we have to improve profitability and cut costs. On a more forecast basis, as I said, 2027 will have less volume than 2026. We will sit on a rather unfavorable fixed cost absorption position, and we still have extraordinary effects, especially for the Zukunftspaket.
Therefore, we expect that we will be below 2026. What the exact numbers will be for 2027, this is something that is still something we are working on and that we will communicate more precisely along the road, as I just said. Important, a midterm ambition, of course, also three weeks after the CMD is confirmed. That is a fixed plan. The initiatives are progressing very well. The first proof points are already achieved. I commented on the Mission S on the product strategy side, but also on the progress of the Zukunftspaket, when I come back to the first question Tim raised in this call. No changes, no updates there, and between 2027 and 2030, 2031, we will do it year by year and see how things move and how we get along with the improvements that we are targeting.
Jochen, thank you very much.
J ust to confirm on the one-offs, it's EUR 800 million-EUR 900 million this year, down to around EUR 400 million next year? That's correct ?
That's correct, yeah.
We are not expecting anything from improvement in the supplier compensation payments. That is for a little bit later w hen you get into the new EV platforms?
That is correct. The increased material costs that we have on our current EVs will stay until these EVs run out and the next cars will be launched.
Thank you, Jochen. Appreciate it.
Thanks, Henning.
Henning, thank you very much. Thank you very much, Jochen. With this, I see. Okay, last in the row will be Philippe Houchois of Jefferies.
G ood morning. Thank you for taking the question last minute. I am still not quite clear. Jochen, could you clarify again how much payment was made to Audi in the third quarter? We understand that you keep it kind of vague in the full-year, but the Q3 amount, did you mention something?
Philippe, you are asking about the Audi payments, which are a spec-
No, in Q3 specifically. I am a bit confused.
Until Q3, we had first EUR 300 million. In Q3, it was a zero, and we expect substantial additional payments in Q4.
Okay. All right. There is nothing in Q3. That is what I want to hear. Thank you very much.
Okay. Philippe, have a good one.
Philippe, thank you. Jochen, thank you. With this, finally, now we come to the end. Thank you to all of you joining this call, and thank you very much to all of you listening in to this Q3 conference call for analysts and investors of Porsche AG. Before we come to an end, we would love to point you to our upcoming capital market events. First of all, this is now the Q3 road show that will get us to London, to New York, and to the West Coast. Most of you should have the invite in the inboxes for the Icons of Porsche community event that will be accompanied by a small capital markets update by the Porsche management team.
If you are interested in Porsche, if you love the brand, and if you want to see the passion of our customers, you need to come to Dubai and join us over there. For the ones of those who have not seen the Mission S, this could be also a quite nice and great opportunity to take a closer look at that product. Thank you very much. Have a lovely day, and we stay in touch. Bye bye.
Bye bye. Thanks, everyone. Talk soon.
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