At the same time, we work to better understand the complexity of the company, the environment in which we operate, and the challenges Porsche will have to master in the years ahead. Only then can you build a strategy that is grounded in reality. There has certainly been no shortage of opinions about what Porsche should do and what Porsche should not do, and what Porsche may or may not have done wrong. We listened carefully, we challenged our own assumptions, and we did a lot of fundamental work. What we are presenting today is grounded in facts, supported by detailed analysis and backed by first proof points. Speaking of proof points, you may have already noticed that there is something in the room which you cannot quite see yet. The car under the cover will play a role later today.
Now, let me come back to the strategy itself. What is Sportwagenschmiede 2035? Many of you came here expecting numbers, and don't worry, you will get plenty of numbers today. Revenue targets, profitability targets, cash flow targets, all of that matters. This is not the leitmotif, not the core of today, because the numbers are only a consequence. They are the result. The story starts with something else, with our unique brand. For me, the Porsche brand is the most valuable asset we have. It is a narrative that runs through everything we do, because our brand is unique and gives us identity, and it allows us to do things that very few companies can do. No other brand has this pricing point with this volume. Many tried, but nobody reached it. You can- the pinnacle of sports cars to the all-rounder.
You can see it the way we manufacture cars. It was important that we based it on assumptions that are conservative, but realistic and robust. That was conservative, but it isn't a warranty that nothing can happen. But we wanted to have a really solid starting point for our strategy. Because personally, I don't expect this environment to become significantly easier over the next few years. Which means there is little value in waiting for better conditions. The only sensible approach is to focus on what we can influence ourselves, to improve competitiveness. To make the company leaner, faster, and more resilient, and to put our own house in order. Because ultimately, I'm totally convinced, every crisis also creates opportunities. This brings me back to the very beginnings of our brand, to a man who remains central for the Porsche story, Ferry Porsche.
Many of you know his famous quote, "In the beginning, I looked around and could not find quite the car I dreamed of, so I decided to build it myself." He said this in the years after the war, a time that was challenging in many ways. The idea of sports cars probably seemed to be nonsense to many people, something nobody needed. But Ferry Porsche built it anyway, and looking back, it was an extraordinarily courageous decision. He had a vision. He trusted his convictions, and he was willing to take risks to turn that vision into reality. This is exactly the spirit we need again, the willingness to shape the future instead of waiting for it, the confidence to follow our own path, the determination to turn convictions into action. That is why our mission remains unchanged. We build the sports cars that our customers dream of.
Just like Ferry Porsche, we are driven by the love for sports cars. It is at the center of everything we do and the reason why Porsche exists. That is why we have made this our vision, the love for sports cars. This is also about our customers, the people who share this passion, who dream about sports cars, who drive them, collect them, race them, and talk about them. They are the people we develop and build our cars for, and ultimately, they are the reason why we come to work every day. Ladies and gentlemen, our strategy consists of six elements. At the very top stands our strategic direction. We want to reinforce Porsche as the world's most desirable sports car manufacturer.
This ambition rests on three pillars, just like the iconic sculpture in front of the Porsche Museum in Zuffenhausen, which inspired the structure of our strategy. The first pillar is brand and customer. I said it earlier, this is our highest priority. Everything starts with the brand. We remain firmly committed to value over volume, and we want to further elevate our positioning, protect the exclusivity of Porsche, and strengthen the pricing power that comes with a highly desirable brand. The second pillar is products and technology. Products are what bring a brand alive. They are the most visible expression of what Porsche stands for. Our ambition is clear. We want to create exclusive and emotional sports cars, experiences that are unmistakably Porsche. Then we have the third pillar, enterprise and operations. As I said, the world around us is changing rapidly.
We do not know what the next crisis will look like or where it will come from. That is why Porsche needs to be adaptable, efficient, and resilient. We need an operating model that enables us to perform under different market conditions and lowers our break-even point over time. Supporting all of this are what we call the enablers. They form the foundation beneath the three pillars. This includes a clear focus on our core business, a leaner organization, and a leadership team that is fully committed to executing this strategy. Ultimately, all of this has to translate into financial performance, in profitability, in cash generation. Very few companies combine strong earnings and strong cash performance in the way Porsche does. Our ambition is to build on exactly that strength.
Before my colleagues, Matthias Becker, Michael Steiner, and Jochen Breckner, as well as myself, explain each element in detail, let us now take a first look at the three pillars, starting with the brand. Porsche is the most valuable automotive brand in the world and one of the most valuable brands globally, alongside names such as Ferrari, Louis Vuitton, and others. That is not our opinion. It is a conclusion of independent experts and external rankings. Later today, Matthias will explain in more detail what makes the Porsche brand so unique. Let me underline one point. One of the key objectives we have to set ourselves is to further increase the average selling price, especially for our top 10,000 vehicles.
Many of you are asking me very often, "Michael, why do you not go only in the upper segment?" This is exactly the uniqueness of our brand, and this is what gives us power. We will show you later how powerful, how strong we are in this segment. We are at the same level, at the top level on the first 10,000 vehicles with our pricing power and in this profit pool. In the same time, we have the capabilities to scale that up and create then also cash opportunities that are unique. Another key target is to be at the very top when it comes to product quality, because that is what a brand like Porsche has to stand for.
As I just said, the customer is at the center of everything we do, but ultimately, we are in the business of building and selling cars, which means we need products that excite customers and create value for the company. That brings us to product and technologies. Our goal is to further sharpen the portfolio. We want to increase portfolio efficiency by 30%. In practical terms, that means generating more sales per derivative. This allows us to focus even more strongly on cars that truly define the Porsche brand. The additional room created through higher capital efficiency gives us the opportunity to introduce highly differentiated more and new models. These products will be focused primarily on the upper segments. By 2030, almost half, almost every second of our derivatives, will be positioned in the top segment, means D and E segments. We have a clear ambition.
In every segment in which we compete, we want to offer the sportiest car. Michael Steiner will show you later how the right technologies will help us achieve exactly this goal. Creating these kinds of products, however, requires the right company behind them. That is what enterprise and operations is all about. This is an area where we have already made substantial progress. We have worked hard over the past months and have already delivered tangible results, but we are not finished. Going forward, we want to reduce cost across the entire value chain. Depending on the area, we see efficiency potentials of between 10% and 30%. Cost efficiency, for me, is a hygiene factor for every company and creates a foundation for everything else. It will make Porsche more efficient, and as a consequence, it will make Porsche more resilient.
The enabler behind all of this progress is our organization. Over the years, we have grown disproportionately in indirect functions and even more so in management layers. We will correct that. I will go into that in detail later. At the same time, we will strengthen accountability and reinforce our performance culture. Individual performance will have a much stronger impact on variable compensation than it does today. In some areas, its weighting will be up to three times higher. Because a high performance company needs a clear connection between contribution, accountability, and reward. All this ultimately translates into value creation. We want to be a high performance company with strong profitability and superior cash generation. Based on the measures we have outlined today, we see revenues of between EUR 41 billion and EUR 45 billion in the medium term. We target profitability of between 10% and 15%.
Today, we see ourselves in the lower part of that range. Moving toward the upper end would require either stronger execution than currently assumed or a more favorable external environment. We target net cash flow margins of between 9% and 12%. As you know, that is an outstanding level, not only in the automotive industry, but across many other sectors as well. It is also a level Porsche achieved in its strongest periods before. Yes, these targets are ambitious, but we believe they are realistic because they build on strengths that are unique to Porsche. Our brand, our price-volume positioning, our products, our industrial capabilities, together they all allow us to achieve strong profitability and exceptional cash generation with fewer vehicles, a leaner organization, and lower capital intensity. Very few companies can combine these dimensions in the way Porsche does.
That is one of the things that makes Porsche so special. But ladies and gentlemen, we have to be honest, none of that will happen overnight. What I described today is our medium-term ambition, and achieving it will require a great deal of hard work. The first step is to streamline and rightsize the company. We are already implementing rigorous cost reduction measures across the business. I have mentioned the organizational efficiency programs, but the effort goes far beyond. It also includes product cost and all other major cost categories. At the same time, we need to address important gaps in our product portfolio. Today, we do neither offer the 718 Boxster and Cayman nor the Macan with a combustion engine.
Closing these gaps is one of our immediate priorities, and the planning is as follows: next year, we will launch the electric 718, and in 2028, the combustion engine Macan. These are important steps because, with these additions in place, we can continue the development to develop the rest of the portfolio. We can further strengthen our existing product offering, and we can build momentum for the brand, for excellent profitability, and for outstanding cash performance. With that, I hand over to Matthias, who will take you through the brand customer chapter. Thank you.
Ladies and gentlemen, let me now turn to the first pillar of our strategy, Sportwagenschmiede 2035, brand and customer. This pillar underpins everything we do. At Porsche, sustainable value creation starts with desirability, with a powerful brand and customers who aspire to drive a Porsche.
Realizing our strategy requires disciplined execution across the whole company. We are rightsizing our cost base, we are improving productivity and profitability, and we are continuously evolving our product portfolio. These priorities are essential, and they build on what has always set Porsche apart, the uniqueness of our brand and the passion of our customers. This is why one key principle continues to guide our decisions, value over volume. For Porsche, this means further reinforcing our distinctive positioning, maintaining a disciplined balance between demand and supply, and creating the basis for sustainable pricing power and strong residual values. Today, I will show you how our brand, our customers, our products, and our quality ambitions come together to drive long-term value creation. As Michael has already outlined, our mission is very clear: to further increase the value we create with every car we sell.
We measure our progress across three closely linked dimensions: brand, value, and quality. First, brand. A strong and highly desirable brand is the foundation of our business model. Porsche is more than a product. It is a dream, a passion, and a lifelong aspiration for many customers and fans around the world. It creates customer demand, safeguards exclusivity, and supports pricing power. Second, value
This means our ability to increase the value we create with every vehicle. We achieve this through a focused expansion into higher segments, a richer product mix, and greater individualization. Especially at the top end of our portfolio, we see very promising value potentials. Third, quality. Quality ensures that every product and customer experience consistently delivers on the promise of our brand. It reinforces trust, loyalty, and long-term desirability. Together, brand, value, and quality form the foundation of our value over volume approach. Ladies and gentlemen, the brand is our foundation. Desirability begins with a unique identity and a distinctive positioning. A clear brand identity is essential for a strong brand, and this clarity matters beyond our prospects and customers. It also provides direction across our company internally. As part of Sportwagenschmiede 2035, we have sharpened our identity and our core brand values.
At the center of this identity is one clear conviction. Porsche is and will remain a true sports car brand. We love sports cars. This commitment shapes our products, the experiences we create, and our attitude to challenges. Porsche has always been defined by its ability to combine apparent contradictions, heritage and progress, performance and practicality, design and function, exclusiveness and community. This is unique. What makes Porsche unique is not any of these qualities in isolation, but the ability to bring them all together without compromise. It is this distinctive combination that has shaped Porsche for decades and continues to strengthen our differentiation and desirability today. Heritage, exclusiveness, design, and performance together with driving fun, are the values that differentiate Porsche. They come to life in our products, shape our communications and customer interactions. Most importantly, they can be experienced behind the wheel every day.
This is how our customers perceive Porsche. For more than 75 years, we have been doing things differently. Ignition key on the left, engine in the back, and driveR&Driving fun always at the center of everything we do. Talking about driving fun, motorsport is part of our DNA and has shaped Porsche from the very beginning. We are race born. Our track record speaks for itself. Since 1951, Porsche has achieved more than 30,000 race victories worldwide. With 19 overall victories at 24 Hours of Le Mans, Porsche remains the most successful manufacturer in the history of the race. Motorsport is deeply rooted in our heritage and remains a source of success today. With wins at Daytona and Spa and Formula E World Championship titles in 2026, and just recently, an outstanding victory at the Petit Le Mans in Atlanta last weekend.
Our principle is simple. We build race cars to build sports cars. Motorsport brings technologies from the racetrack to the road. Competition on the racetrack pushes us to continuously improve performance, and our racing spirit inspires Porsche communities around the world. At the same time, customer racing is the foundation of our motorsport activities. With more than 5,000 911 based cup cars produced, Porsche is the world leading provider of customer racing. You see, motorsport is an essential part of our business. It advances our products, reinforces our credibility, and strengthens our brand. For a selected group of passionate enthusiasts and collectors, we are now creating a new way to become part of this story. We are opening access to a highly selected number of authentic Porsche 963 factory racing cars from our sports car programs in the U.S. and the World Endurance Championship.
These vehicles are far more than competition machines. They are part of Porsche's motorsport history, having competed at the highest level of endurance racing and helped shaping the DNA of our brand. The program is intentionally limited, with its appeal rooted in authenticity, rarity, and exclusivity. It strengthens the connection between Porsche and some of our most dedicated customers and enthusiasts, who share our passion for motorsport. This is another example of how we translate brand strength into desirability and create value through exclusivity rather than volume. For us, the brand is about far more than image. It is about the experience we create and the strong community around Porsche. In fact, Porsche has the largest and most passionate community in the automotive world. That is one of the core reasons people fall in love with Porsche.
You see, we are a strong brand, deeply rooted in motorsport, and a strong brand is also a key success pillar for driving long-term value. Of course, the strength of a brand cannot be measured by what we say about ourselves. This is why we continuously assess our brand performance with external experts across the world. For instance, according to Brand Finance, Porsche is the world's most valuable luxury and premium brand, a position we have held for nine years in a row now. More important than a ranking itself is what it represents. A cleaR&Distinctive positioning in the eyes of our customers and stakeholders. This clarity drives desirability, and desirability supports demand and pricing power. This is more than a communication message. It is another driver of our long-term success. But how do we translate this brand strength into business value?
A key part of the answer is our positioning. What makes Porsche truly unique is our positioning. We operate at the sweet spot between sporty premium and sporty luxury, and this enables us to do something no other brand can achieve: to offer an aspirational entry into the Porsche brand and to expand selectively into more exclusive and higher margin segments. This position is one of our greatest assets. It is reflected in a highly attractive and cash generative portfolio. Our unique positioning also creates significant opportunities for further growth. One of the strongest drivers is our top-end business. This is where we see some of the greatest potential within our portfolio. Let's take a closer look. Already today, our top 10,000 vehicles sold each year achieve an average selling price of around EUR 270,000, placing Porsche firmly within the luxury segment. Yet, we see significant additional potentials ahead.
Over the midterm, we see a path to increasing the average selling price in this top segment to more than EUR 330,000. This represents an increase of around 20% compared to today. Three levers will help us to unlock this potential. First, we selectively plan to expand our portfolio. The main addition we plan here is a portfolio expansion above today's 911. Second, a richer mix within our existing portfolio will further increase value through highly desirable derivatives and higher performance variants. Third, greater individualization and exclusivity create additional opportunities to grow value per vehicle. Together, these three levers provide a clear path to further increase value in our top-end business. Let me now focus on the third lever, individualization. Individualization is a distinctive and well-established part of our business. It increases exclusivity by giving customers more opportunities to make their Porsche uniquely their own.
We address this opportunity through two complementary offerings. First, Exclusive Manufaktur. It offers curated factory personalization while preserving the exclusivity of the Porsche brand. By expanding our core range of options and unlocking the full potential of Paint to Sample, we aim to increase option turnover per vehicle by around 20% in the midterm. Fully integrated digital customer experience will make this offer even more accessible and seamless, from inspiration to configuration and ordering. Second, Sonderwunsch. Sonderwunsch represents bespoke automotive craftsmanship at its highest level. It takes personalization beyond configuration and creates truly bespoke vehicles in close collaboration with our customers. You dream it, we build it. To meet market demand, we will scale our manufacturing capacities. At the same time, we will enhance operational efficiency by increasing internal value creation. Taken together, Exclusive Manufaktur and Sonderwunsch give us two powerful and complementary growth paths.
One scalable and predefined, the other truly bespoke. This ambition demonstrates the significant potential of individualization. Yet it only represents one element of a much broader opportunity across the product portfolio. This brings me to our new vision, the Home of Sports Cars. As I mentioned before, the combination of design, driving fun, performance, exclusiveness and heritage makes Porsche exceptionally difficult to replicate. Building on these strengths, we see substantial growth potential in three of Porsche's most powerful differentiators, performance, exclusiveness and heritage. All three areas of the expansion are based on successfully established offerings, while extending Porsche into product segments that we have not previously addressed. Performance allows us to build on our sports car credibility through offerings from GT and RS models to Manthey kits and track experiences, further extending the capabilities of our vehicles on and off the track.
Exclusiveness builds on the individualization offering we have just discussed, including Exclusive Manufaktur and Sonderwunsch, and it extends this into new areas of value creation and customer experience. Heritage builds on the enduring relevance of our brand and its icons through initiatives such as heritage design and anniversary limited series and packages. With new additional ultra-high-end offers, we turn Porsche's unique strengths into new opportunities for growth. Stay tuned as we will bring this vision to life in today's spin-off session, Home of Sports Cars later on. At the end, the foundation of all these opportunities is our strong and loyal customer base. Their passion for the brand, their loyalty, and their long-term engagement with Porsche makes sustainable value creation possible. Porsche operates in very attractive global market segments with significant growth potential. At the core of this opportunity is a large and highly attractive customer base.
The global Porsche car park comprises approximately 4.4 million vehicles, with a well-balanced footprint across the Americas, Europe, and the rest of the world. Our customers are exceptionally loyal. More than 60% of our customers stay with Porsche for over a decade, often purchasing several vehicles over time. At the same time, we have a highly valuable top customer group. Over a 10-year period, our top customers in Germany and the United States., for instance, spent 13 times more than the average customer. The strategic importance of this top customer group goes beyond purchasing power. Our most engaged customers are powerful ambassadors for the brand. They strengthen the Porsche community, increase brand visibility, and inspire new customers. To deepen customer relationships, we create inspiring experiences beyond the product itself. Our retail partners bring the Porsche world to life for customers around the globe.
They continuously invest into our brand, our retail infrastructure, and the customer experience. Our Porsche Experience Centers create lifetime memories on and beyond the racetrack. Through our own brand events such as Icons of Porsche in Dubai and Rennsport Reunion in the United States, as well as our participation in global events such as Goodwood Festival of Speed and Monterey Car Week, we extend the appeal of Porsche beyond the automotive sector. These formats serve different purposes, but they all have the same objective: to create a deeper emotional connection between our customers and our brand. Every interaction is unmistakably Porsche, physical and digital, global and local, exclusive and welcoming. Our customer base is one of Porsche's greatest strengths. Our success depends on one essential factor, and that is quality. Quality is what turns customer expectations into lasting trust. Quality is the foundation of our business.
It protects the customer experience, which lies at the core of our brand promise and the value we create. We therefore translate this principle into clear operational targets. Our quality ambitions cover three dimensions: product quality, service quality, and warranty spend. For product quality, we aim to build on our success in the J.D. Power Initial Quality Study, having advanced from the 13th place in 2025 to the number one position in 2026. Our ambition is to maintain and reinforce this leadership in the long and medium term. To achieve this, we will further increase product maturity at the start of production and accelerate defect detection and resolution. In service quality, we currently rank first in the J.D. Power Customer Service Index. Yet customer expectations continue to evolve, and so do our standards.
We will further improve service quality through focused service execution, stronger lead management, and a more decentralized supply chain with local hubs. Quality supports efficiency. We aim to reduce warranty spend even further through fewer claims and lower costs per claim. Better quality strengthens customer trust, reduces avoidable costs, and protects the long-term value of our products and our brand. This is a clear win-win situation for our customers and for Porsche. As I come to the final part of this chapter, let me return to the principle that connects all of these elements. As Ferry Porsche once said, we care more about building outstanding cars than producing them in high volumes. Or, as we say in German, [Non-English content ]. This philosophy still guides us today. Ladies and gentlemen, let me conclude.
Today, we have shown how Porsche translates brand strength into business value. Our brand creates desirability. Our positioning is unique. It allows us to operate at the sweet spot between sporty premium and sporty luxury while creating opportunities for further value growth at the top end of our portfolio. Our approach to individualization by our Sonderwunsch, Exclusive Manufaktur, and the Home of Sports Cars extends value creation beyond our core offering. Our customers are among the most loyal and engaged in the industry, and our commitment to quality protects the trust that underpins all of it. Our ambition is not growth at any cost, it is sustainable, value-creating growth. In other words, value over volume. It is built on the enduring strength of Porsche, a highly desirable brand, a distinctive positioning, and unique sports cars.
That is what value over volume means in practice, and this is how the pillar brands and customer contributes to our strategy, Sportwagenschmiede 2035. Thank you very much for your attention.
[Presentation]
Whatever we build turns out to be a sports car. Quite remarkable, isn't it? Well, then let's talk about sports cars. Matthias has just explained how unique and how wide the range of our brand is. The same is true for our product portfolio. Let's take a closer look at that now. Immediately after I joined Porsche, we began a comprehensive review of our portfolio. We wanted to understand where Porsche can create the greatest value
For customers and where we see the strongest potential. The outcome is a sharper focus and consequently an expected increase in sales per derivative of around 30%. As mentioned at the outset, we will use the resulting scope, in particular, to position further models in the upper segment. These are precisely the areas where Porsche has some of its greatest strength, and it is noticeably shift our portfolio upwards across the segments. The principle remains, every Porsche must be a sports car, and that is exactly what it is, and Michael Steiner will shortly explain the technical foundation behind this. We apply this standard to our entire portfolio, despite its wide range. Customers can expect an experience that is emotionally engaging and unmistakably Porsche. Matthias said, every product decision points at the core of our brand: heritage, exclusiveness, design, performance, and driving fun.
Our current portfolio reflect this very well. We are already strongly positioned, yet we see potential for additions. Speaking of the enormous range, let me show you two examples. First is the 911 GT3 S/C. You really can't describe a car like that. The sound, the incredible engine speed, the car is roaring to go, and that feeling is instantly contagious. The demand for this car has exceeded our expectations by far and outpaced available supply. As of today, the GT3 S/C is almost sold out already. Then we look at the other side of the range. When I arrived here, we just launched the Cayenne Electric. You may know, given my background here in Porsche, I have a special connection to that car. So the bar was very high. But this Cayenne, especially the Turbo, has more than earned the nameplate.
It is an all-round SUV with incredible acceleration and technology we adapted from Formula E, recuperation in this case. It is a true performance beast for every day. As you can see, this spectrum is enormously broad, and now the challenge is to handle it efficiently nonetheless. Based on our analysis, we see opportunity to reduce the number of derivatives in our portfolio by around 20% in the midterm. This will significantly simplify the portfolio. The rule is here, less is ultimately more. Fewer derivatives mean greater focus. It allows us to concentrate our efforts on the product that matters most and make them even more unmistakably Porsche. Alongside this reduction in complexity, we also considerable potential to improve portfolio efficiency. The more volume can be concentrated in fewer derivatives, the more efficiently the portfolio can be developed, manufactured, and distributed.
Here we see the potential to significantly increase volume per derivative over the medium term. Our ambition is to improve this metric by around 30%. Once you simplify a portfolio in this way, you can clearly see where opportunities and profit pools emerge. Opportunities where customer demand exists and where we believe Porsche can offer a product that is authentic to the brand and distinct from anything else in the market. In the two-door segment, this includes opportunities both above the 911 and through additional highly emotional derivatives of our iconic sports car. We also see attractive opportunities in the SUV segment, above the Cayenne, and we are making steady progress here. At this stage, I don't want to reveal too much, but I can tell you we are developing a super sports car platform, and we intend to use it as the base for a new mid-engine supercar.
A car that will sit above the 911, and that is why the car under the cover here is standing there. The Mission S is an idea of what such a car might look like, and I say might look like because it is a visualization of a platform. Please allow me some personal remarks on this car and the Mission S. For me personally, this is a highlight, and I am strongly convinced this is an important milestone in the history of Porsche because it is the first time Porsche will enter in the supercar segment. This is not a hypercar. This is a continuous offer. It is a platform that will contain the best ingredients from Weissach. It will be flexible regarding technology, hybridization, non-hybridization, engines, and it will be designed based on first principle of supercar engineering.
With my pedigree and my know-how, I will try everything to make the Mission S to success. That S stands not only for supercar, but also for superstar. A superstar regarding performance, regarding driver engagement, emotionality, and profitability. It is a vision of how Porsche can continue to evolve while remaining unmistakably Porsche. It reflects some of the ideas, proportions, and design principles that will influence our future products and help shape the next chapter of our brand. Tobias Sühlmann, our Head of Design, will explain this later after lunch. We will share this beautiful car with the world next week on October 15th in New York. Please bear with us a little longer. It will be worth it. Now, let me return to the broader point.
These projects are important because they represent exactly the type of opportunities we want to pursue more systematically in the future. This will shift the composition of our portfolio. Today, roughly one-third of our models are positioned in the top segments of the market. By the end of the decade, we expect that share to increase significantly. In fact, close to every second model, 50% of our portfolio, could be represented in these highly attractive segments. I think that is a very important step for us to create value, but also to enter in segments that are less volatile and helps us to be more resilient versus economical changes and volatility. As I said, this is an important driver for future value creation, and the segments offer a combination of strong growing customer demand, high exclusivity, and attractive profitability.
At the same time, the more focused portfolio we discussed earlier allows us to pursue these opportunities without increasing complexity. We are becoming more selective about where we compete and more ambitious in the segments where we see the strongest fit with our brand and our customers. Everything I have described so far is also reflected in the way we think about individual markets. In this context, China deserves a dedicated remark. As we mentioned earlier, our approach remains firmly guided by the principle value over volume. This is particularly relevant in a market like China that has changed as fundamentally. At its peak, China accounted for around 35% of our global sales volume. Since then, market dynamics have changed significantly, unfortunately. We therefore do not believe that it would be realistic or beneficial for our brand to pursue a return to those levels at any cost.
Instead, our objective is to take a very conservative side on the market and build a more resilient business in China. We are focusing on segments of the market where Porsche and Porsche strengths are valued the most: exclusivity, brand heritage, engineering excellence, and distinctive sports car experience. This allows us to concentrate on attractive and profitable niche rather than chasing volume in an increasingly competitive segment. At the same time, our business model in China remains highly scalable. We are not constrained by local production commitments or joint venture structures that require a certain volume level to remain viable. This gives us greater flexibility to adapt to changing market conditions, downside, but also to potential upsides. However, we are also continuing to strengthen our local capabilities where they matter most to the Chinese customers, areas such as digital experiences, driver assistance systems.
These systems influence strongly purchasing decisions in China, and we are further enhancing our competitiveness in this field. The result is a China business that is smaller than it was at its peak, but stronger and resilient. Ultimately, we are also making our global portfolio more resilient overall. Again, a personal remark on China, I think it is important that we have taken a conservative view on China because we want to have a solid starting point for our business plan. We are happy to take upsides. We want to avoid downsides. Obviously, it is very difficult to predict the further development in China, but I think the reset we have taken in our business plan is important. Anyway, if there is a recovery, we are prepared to scale up again. We do not want to give up the market.
Customer preferences are always our top priority, and they are developing at different speeds across regions and across vehicle segments. The same is true for the transition to electric mobility. A few years ago, many, including us, expected a much faster and more uniform shift toward battery electric vehicles than we see today. To this day, we at Porsche view ourselves as a true pioneer of electro mobility. Above all, of course, with Taycan, but also with the Macan, with the Cayenne, and the electric 718, which I will discuss in a moment. Reality has turned out to be more complex. This is why our drivetrain strategy is guided by the same principle that shapes our broader portfolio decisions. We start with the customer. Combustion engines and plug-in hybrids remain an important part of our future product strategy.
They continue to play a highly relevant role for many Porsche customers around the world, and we want to offer our customers superior and emotional drivetrains as a centerpiece of our product strategy. Restrengthening our investment in combustion technology, though, does not mean divesting in electro mobility. Battery electric vehicles also remain an important part of our portfolio. We are convinced of their long-term potential and we intensify our investment accordingly. What matters is that we can offer our customers the right Porsche at the right time. This gives us greater flexibility in a changing market environment. This is in line with our commitments to our responsibility in climate protection, too, and we continue to play an active role in reducing greenhouse gas emissions within our sphere of influence. The reduction is based on two elements. First, our volume and portfolio mix, including increased share of electrified vehicles.
Secondly, the decarbonization of our value chain, including the use of renewable electricity and recycled materials. Now back to the 2 : 1 ratio of propulsion technologies I just mentioned before. Here, too, the wide range of our portfolio is clearly evident. For models positioned in the upper market segment, we are clearly relying predominantly on internal combustion engines. I am referring primarily to the 911, of course. I can assure you the 911 will never be electric. We also find our sports car sedan, Panamera, in the upper segment, which we offer as a pure combustion engine model as well as a hybrid. The situation is slightly different with SUVs. Here, in the larger upper segment, we are represented with all types of powertrains.
If you look further down at the segments, at Porsche, we are focusing more on BEVs and we continue to invest in that area. For instance, you will find the Taycan here, as well as the Macan and our entry-level two-door model, which we now offer exclusively as an electric vehicle. I personally, I am honest, I was very skeptical about this vehicle. That lasted only until I drove it for the first time. Since then, I have been thrilled. The 718 is an absolutely fantastic sports car. If you do not believe me because I am biased, ask Walter Röhrl. The world-renowned sports car specialist and self-confessed EV skeptic tested it and he is not only convinced, he is enthusiastic. Michael later will explain to you a little bit more about the concept behind it in a moment, and one special element there, the Porsche center battery layout. We call it e-core architecture.
Looking around and across everything, I have to talk about one question that naturally emerges. How can Porsche pursue so many different opportunities while remaining focused and disciplined? The answer starts with a clear platform strategy, because our objective is not to maximize variety. Our objective is to concentrate our resources where they create the greatest value for customers and the greatest differentiation for the Porsche brand. This is one of the reasons why collaboration with the Volkswagen Group remains so important for Porsche. It gives us access to scale where scale matters, while allowing us to focus our own development efforts on those areas that define the character of our products and the experience behind the wheel. It enables us to offer a broader range of products and powertrain technologies while remaining disciplined in how we allocate capital and engineering resources. One thing, of course, remains unchanged.
Just as Wolfgang Porsche said, "Whatever we build turns out to be a sports car." If there is anyone who can tell you how this works, it is Michael Steiner. Michael, over to you.
Thank you, Michael. You have just heard how we are strategically developing our product portfolio to address increasingly diverse markets and customer expectations. Now, let's go one step further and focus on the technology behind this portfolio. I’d like to begin with the roots of our brand, the Porsche 911. For generations, the 911 has been the perfect expression of what Porsche stands for. It combines tradition and continuous innovation, performance and everyday usability, emotional appeal and technical precision. The 911 is the core of our brand, and it defines the ambition for every other Porsche. Ferry Porsche once described it as the only car you could drive from an African safari to Le Mans, then to the theater and onto the streets of New York. This quote captures what makes the 911 so unique. It brings together qualities that may seem like opposites.
This leads us to the key question that guides us here in the development center: What makes a Porsche a Porsche? As Head of R&D, I believe the answer lies in how we translate the characteristics of our brand into technology. As Matthias already outlined, a Porsche combines iconic design, motorsport heritage, outstanding performance, driving fun, and exclusivity. Design means more than aesthetics. The form of the vehicle must support its function, its aerodynamics, and its overall performance. Heritage means translating our racing experience into series production. For example, through scalable, lightweight concepts. Performance is not defined by power alone. It results from the interaction of the powertrain, the chassis, aerodynamics, brakes, and all these things coordinated by software. Driving fun is created by an intuitive, direct connection between the driver, the vehicle, and the road.
Exclusivity is expressed in unique GT models, limited special editions, and vehicle concepts with a very distinctive character. Together, these characteristics create a unique Porsche DNA that defines every Porsche model. So how is this reflected in our technology strategy? We focus our innovation efforts on the core disciplines that define Porsche, where we aim to be unique and best in class. Within these fields, we are working on selected technologies such as integrated battery systems, fully active chassis systems, or further applications of our iconic T-Hybrid technology. This is a super lightweight concept with very compact 400V battery that just matches size-wise, a conventional 12V battery. This technology is displayed in the back of this room, just behind you. We are also evolving the way batteries are integrated into the vehicle.
As Michael already highlighted, in the electric Boxster, for example, we will introduce a Porsche center battery layout, a unique architecture that positions the battery where the combustion engine would traditionally sit. This center layout supports a low center of gravity and enables the characteristic Porsche driving experience and agility. However, best in class is not about individual technologies. It's about how we bring them together. Our focus, therefore, is clear. We invest technology where it makes a real difference for our customers and sets Porsche apart. We apply these principles consistently across our entire portfolio, regardless of segment or drivetrain. As Michael Leiters explained earlier, one of our key objectives is the increased desirability of our future EV portfolio. Advanced cell technology is a key enabler for the next generation of electric sports cars. We have chosen cylindrical cell technology as the foundation of our future batteries.
Our mission is to unlock its full potential and translate it into performance. So higher energy density, improved pack efficiency, and a lower vehicle consumption. We target up to 20% more driving range. Through optimized cell technology, charging strategy, and thermal management, we target up to 50% more range added within 10 minutes of fast charging. Through scalable cell formats, higher component commonality, and more efficient battery integration, we target up to 50% lower specific material costs. All of this without adding weight. The objective is clear, greater range, faster charging, robust, repeatable performance delivered through a scalable and more cost-efficient architecture. The advanced cylindrical cell is an important enabler for our future EVs, but Porsche's strength is technological flexibility. That is why we are advancing a broad technology toolbox, including innovative solutions for combustion engines and plug-in hybrids.
It already covers different engine architectures, from four-cylinder to six-cylinder and eight-cylinder engines, and our iconic boxer engines. It includes naturally aspirated, turbocharged, and electrically assisted turbocharged concepts. It ranges from pure combustion engines to plug-in hybrids and performance hybrids, combined with manual, automatic, or PDK transmission. This gives us a wide range of options to create distinctive parallel powertrains across model lines and derivatives. Our strength is not one powertrain, but the ability to choose the right technology for each Porsche and deliver the same unique experience. We have focused on what will drive future Porsche products. In the next section today, we will focus on how we deliver this ambition in an increasingly competitive environment. Technology leadership is no longer enough. We must execute faster, more effectively, and leaner than ever before. This requires the right organization, processes, and industrial setup.
We want Porsche to become faster, more flexible, and more resilient. We must respond quicker to technological and market change and lower our break-even point to create the financial capacity to invest in future innovations. Technology leadership requires transformation. To deliver future products with unique Porsche substance, we must ensure that our development and operating model remain competitive. As outlined in the previous section, increasing flexibility and productivity is a key priority for Porsche. We have set clear midterm ambitions to enhance competitiveness and improve our cost structure across the entire value chain. In research and development, our ambition is to reduce development costs by around 20%. In procurement, we are targeting approximately 10% lower material costs for new vehicle projects. In production, the ambition is to reduce manufacturing labor costs by around 30%. In sales, we are working towards a cost reduction of around 20%.
We need to become leaner where customers do not see a difference so that we can invest more where they do. In this part, I will focus on the first chapter, R&D. The other chapters will be presented by Michael Leiters. There is no better place for today's discussion than here in Weissach. As the heart of Porsche development, Weissach brings together engineering excellence, motorsport DNA, and innovation in a way that is unique in our industry. Here, we shape the future of Porsche. What makes it unique is the close interaction of all development disciplines in one place. From the design studio here to full simulation capabilities, from the test benches to the test track, experts work side by side throughout the entire development process. This enables faster decision-making, greater innovation, and a true full vehicle approach.
Weissach is non-negotiable as the center of Porsche engineering excellence, but it must become more competitive. Accelerating development is a key priority for Porsche and Weissach. Our midterm approach is a reduction of the duration of the product development process by up to 40%. We will achieve this through greater modularization of the product development process, lower complexity, optimized simulation methods, and a more intelligent testing strategy and closer integration of our tooling capabilities. Digital development and physical testing must complement each other much more effectively. Simulation allows us to assess more technical variants earlier and concentrate physical testing on the areas in which it creates the greatest value. It is about developing vehicles faster and bringing innovations to our customers sooner without compromising Porsche quality. Faster innovation, same Porsche standards. Faster development must go hand in hand with a more efficient cost structure.
Our medium-term ambition is to reduce development costs per model line by around 20% compared with 2025. We are addressing three major levers. First, factor costs. This includes recalibrating the balance between internal and external resources and using engineering service providers more efficiently. Second, efficiency. We will reduce the hours and material required for each project through more simulation, more virtual testing, process automatization, and the targeted use of artificial intelligence. Third, complexity. A more focused portfolio, greater use of synergies, and higher share of carryover parts will avoid duplicated effort. The principle behind these measures is straightforward. We standardize where customers do not perceive differentiation, and we focus our engineering resources on the technologies and capabilities and vehicle characteristics that make Porsche unique. This gives us a more efficient cost base while protecting the substance of our products.
Finally, we are evolving our development organization into a globally connected expert network with Weissach at its center. By combining capabilities of Porsche Engineering and Porsche Digital within Porsche Technologies, we can bundle expertise across regions and technology fields. This gives us faster access to talent, innovation, and market-specific knowledge. In China, Porsche Technologies operates as a local technology hub with particular focus on infotainment, advanced driver assistance and automated driving functions, as well as market-specific comfort features. This allows us to develop closer to our customers and respond more rapidly to regional technological developments. All development activities remain connected through one common principle: Porsche engineering excellence. Ladies and gentlemen, in a nutshell, our direction is clear. We will focus our technologies on areas that matter most to Porsche, where we aim to create unique customer value and set the benchmark.
We will maintain the flexibility to select the right technological solution for each model, market, and customer requirement. We will transform our development organization to become faster, leaner, and more globally connected. Because regardless of the powertrain, the market, or the underlying technology, our ambition remains unchanged. Every Porsche will be unmistakably a Porsche. Technology leadership, flexibility, and execution speed are essential pillars of our transformation. The next stage in the value chain is procurement. Michael, back to you.
Thank you, Michael. Happy to take over here. As far as the supply chain is concerned, we have two targets, cost competitiveness and resilience. We are continuously reviewing our sourcing footprint, increasing transparency, and working even more closely with our supplier. This enables us to improve cost performance and make better sourcing decisions and respond more effectively to changing market conditions. It also strengthens the resilience needed to operate successfully in a more uncertain world. We have identified two major levers to achieve cost competitiveness. The first concerns material cost for future vehicle products. Our objective is to reduce material costs by around 10% over the medium term. To achieve this, we are applying a much stronger design to cost approach from the earliest stages of the product development. We are also placing an even greater focus on those features and technologies that are truly mattering to our customers.
At the same time, we are working more closely with our suppliers. We are involving them at an earlier stage and drawing more systematically on their expertise to strengthen both technology leadership and cost competitiveness. The second lever concerns supplier investments. Here, our ambition is to reduce supplier investment in new vehicles projects by around 15% over the medium term. This starts with a more consistent bundling of purchasing volumes in order to realize additional economies of scale. We are also introducing stricter cost management in all areas from the first concept phase through the production. Wherever it makes sense from customer and product perspective, we will increase the use of shared components across the portfolio and embed this principle more firmly in our product development governance. That will then also have obviously a positive effect on material costs. We see important synergetic effects at several levels.
It starts with our platforms. Here we can leverage synergies both within Porsche and across brands within the Volkswagen Group. Across these platforms, additional opportunities emerge in modules and bundled parts. By using common solutions where they make sense, we can further improve efficiency and devote more attention to the elements that truly differentiate a Porsche. We also see potential in areas where components have effectively become industry standard. For such parts, we will increasingly utilize industrial toolkits and establish solutions available in the market. What we achieve in procurement must, of course, also translate into benefits on the shop floor. This is why we are taking a close look at our entire production footprint. At our headquarters in Zuffenhausen, we produce our two-door sports cars and the Taycan. In Leipzig, we manufacture the Macan and the Panamera.
In addition to these two locations, we also benefit from the manufacturing expertise at the Bratislava site where the Cayenne is built. Every site operates under different conditions and faces different challenges. We are therefore pursuing a tailored approach rather than applying the same measures everywhere. Let us start with Zuffenhausen. It is a very, very special place within Porsche. It is our home, the birthplace of many of our most iconic sports cars, first of all, the 911. A brand-shaping factory and the site where industrial excellence and highly individualized craftsmanship come together. This combination is one of the greatest strengths. At the same time, it creates a level of complexity that few automotive plants have to manage. Our objective is therefore to preserve the unique character of Zuffenhausen while significantly improving its cost competitiveness.
A substantial contribution will come from the measures agreed as part of the Zukunftspaket, which will structurally reduce personal cost over the coming years. In parallel, we are increasing productivity across the site. This includes a more efficient use of working time, greater flexibility in production, integrated mixed-model manufacturing, and the continuous optimization of products and processes. We also see considerable potential in growing demand for our highly individualized sports cars. By integrating Sonderwunsch and other customizations offerings more systematically into our standard production processes, we can expand these activities, getting better utilization while maintaining efficiency. Combined, these measures are expected to reduce manufacturing labor cost in Zuffenhausen by around 30% over the medium term. Then we have Leipzig. Over the years, Leipzig has developed into a highly efficient production site. Manufacturing labor costs are already significantly lower than in Zuffenhausen.
Nevertheless, we have to and we will continue to see substantial potential for further improvement. Our ambition is also to reduce manufacturing labor cost by around 30% over the medium term. To achieve this, we are further increasing productivity across the plant. This includes tighter performance targets, a more efficient organization, continuous optimization of products and processes, and the consistent use of synergies and automation wherever they create value. We are also improving manufacturing structures and team setups to ensure that resources are deployed as efficiently as possible across the plant. At the same time, we are working on additional measures to strengthen flexibility during the coming years. As markets, volumes, and drivetrain mixes continue to evolve, it is important that we can respond quickly and efficiently to changing requirements.
It is very clear we will need this flexibility in the foreseeable future until utilization will improve with the Macan ICE. All these measures will further strengthen Leipzig's competitiveness and reinforce its position as Porsche's benchmark for productivity and cost efficiency. Efficient sourcing and competitive manufacturing are essential, but the value chain does not end when a car leaves the factory. Our sales organization also needs to be efficient and effective. In today's environment, market conditions can develop very differently across regions. This makes flexibility increasingly important. One of our objectives is therefore to balance demand and supply globally. Such a setup reduces dependencies on individual markets and allows us to respond more effectively to short-term changes in demand. It is an important contribution to our business and to the stability of our financial performance.
We have streamlined our sales organization and reduced the number of regions from five to four. This allows us to focus resources more effectively, simplify decision-making, and increase speed of execution. Building on this foundation, we are pursuing a number of initiatives to further improve the competitiveness of our business. The priorities, however, are not the same in every region. Customer preferences, competitive dynamics, regulatory frameworks, and geopolitics conditions differ significantly across our markets. We have therefore defined a clear set of priorities for each region based on its specific opportunities and challenges. In the Americas, our focus is on enhancing our competitiveness through a market-tailored product portfolio, superior ICE and plug-in hybrid drivetrain offerings, and effective operations. In Europe, the priority is to strengthen our performance through drivetrain flexibility and an efficient organization, enabling us to adapt to diverse customer preferences and market requirements across the region.
As for China, we are working on reducing our dependence on that market with a value over volume approach and structural efficiency, creating greater resilience to changing market dynamics and demand patterns. In overseas, we aim to unlock market-specific growth opportunities through targeted initiatives, market-adequate offerings, and active management of geopolitical and macroeconomic risks. As a result, we expect the regional distribution of our sales volume to evolve over time with the Americas and overseas accounting for a larger share of our business. This will further strengthen the resilience of Porsche and reduce our exposure to individual market developments. Regarding our sales and marketing cost base, our ambition is to reduce it by 20% over the medium term. Besides the mentioned leaner headquarter, we are also redesigning our entire sales organization and transitioning to more cost-efficient processes and IT sales systems.
We also see opportunities to increase efficiency across our wholesale and retail activities. In selected markets, we are consolidating shared services, reducing fixed costs, and creating structures that can scale more effectively as business requirements evolve. Finally, we are strengthening the way we allocate resources. We are introducing a more systematic focus on the return on our marketing investments and are deploying AI solutions to identify additional optimization opportunities across the entire sales organization. Delivering on these regional ambitions also requires the right retail network. This is where we see additional opportunities to improve both efficiency and profitability. One important lever to increase the number of vehicle deliveries per point of sales. To achieve this, we are continuously adapting our network structure to local conditions and ensuring that each location is equipped with the right format and the right capabilities for its specific environment.
At the same time, we are implementing targeted performance programs to further strengthen both sales and after-sales profitability across the network. A second area of focus is continued development of our retail formats. Physical retail remains a key element of Porsche customer experience. Our customers want to see our products, experience the brand, and they want to interact directly with our experts. This is why we continue to invest in a differentiated retail landscape that includes Porsche centers, dedicated after-sales formats, and selected urban concepts. Together, these formats help us strengthen customer relationship, improve market coverage, and make our retail network more effective. A strong retail network also creates opportunities with and beyond the initial vehicle sales. Financial services and aftersales play an important role in both customer retention and value creation. Financial services increase customer loyalty and value through personalized offers and generate recurring revenue beyond vehicle sales.
Aftersales remains one of the most resilient parts of our business and continues to provide an attractive and stable profit pool across different market environments. We have defined targeted initiatives across both areas and expect them to make a significant contribution to profit growth over the medium term. Ladies and gentlemen, every transformation ultimately depends on execution. You simply have to be able to get things done. This is what the next chapter is about. For our strategy to deliver its full impact, we need an organization with clear priorities, the right structures, and a sharp focus on what matters most. These are the capabilities that support the three pillars of Sportwagenschmiede 2035, and we call them our enablers. We have defined a clear ambition for the years ahead. As mentioned before, we intend to reduce the number of management positions by 40%.
We also plan to reduce our overall workforce by around 25% over the medium-term. At the same time, we want performance to play a much greater role in how success is rewarded. The team, but also the individual. Everyone counts. Focus is not only an organizational question, it is equally important that we concentrate on the activities that create the greatest value for the company. Sportwagenschmiede 2035 is built around a clear belief. Our greatest strengths, our sports cars and the brand that has grown around them. Over the past months, we have therefore systematically reviewed activities outside our core business. In several cases, we have already taken decisive actions. Examples include the sale of our stakes in Bugatti Rimac and MHP. We are also discontinuing the development and production activities of the Cellforce Group, alongside a number of other portfolio measures.
At the same time, this process is not complete. We continue to review our portfolio to ensure the capital, management attention, and organizational capacity remain focused. Speaking of MHP, the transaction also illustrates how we think about portfolio optimization. It is about ensuring that Porsche has access to the capabilities that will matter most in the future. As part of the agreement, we established a partnership with Tata Consultancy Services that will help us accelerate digitalization and the deployment of AI across the company. AI provides significant opportunities to simplify processes, increase efficiencies, and strengthen areas that contribute directly to Porsche's competitiveness. We have already launched a broad range of initiatives and are making good progress in scaling these applications.
As a result, we expect the annual value contribution generated by AI to increase by around 2.5 x over the medium-term, with substantial additional upside beyond that. The productivity gains generated through these technologies support the organizational changes I mentioned earlier. We are deliberately placing a stronger focus on management structures. A large share of the reduction will therefore take place in leadership and administration focus. The objective is straightforward: leaner structures, faster decisions. In addition, the Zukunftspaket includes a number of measures that will further improve our cost competitive over the medium-term. We are tempering future salary increases, adjusting special payments, and changing management compensation. In a nutshell, these measures are expected to reduce personnel costs by a further 10% compared with our previous planning, and gradually move our compensation structure closer to industrial benchmarks. Structural measures such as these are essential.
But structures alone do not improve performance. Today, only 10% of the annual bonus for our top management, that is the first reporting line below the Executive Board, is tied directly to individual performance. Over the coming years, we will increase this share up to 30%. We believe differences in performance should be reflected more clearly and more consistently in the way we reward leadership. The same principle applies more broadly across the company. We want to strengthen the connection between individual contribution and long-term value creation. Therefore, we plan to grant a portion of the annual special payment in the form of Porsche preference shares. The next annual general meeting will decide on the matter. In submitting this proposal, the Supervisory Board is following a recommendation from the Executive Board. This will further strengthen the alignment between employees and the long-term development of our company.
Now, we have talked a lot about numbers, facts, and targets this morning. That is important. But none of that we have discussed will happen without people, because performance alone is not enough. In a world as volatile as the one we are operating in today, we also need an organization that is flexible, resilient, and prepared for whatever comes. In short, we need Porsche to be future-proof. At the core of that ambition is our culture. Culture shapes how we work together, how we make decisions, how quickly we adapt when circumstances change. Building the right culture takes time. It's a journey. For me, this is more than an organizational topic. It is my personal ambition. I want Porsche to be a future-proof company.
A company that performs in good times, a company that remains strong in difficult times, a company that is ready for the opportunities and the challenges of the decades ahead. Ladies and gentlemen, I think one thing that has become pretty clear this morning, Porsche's greatest strength is the extraordinary range that exists within our brand. I don't know any other company that can do like we do. Our brand is highly exclusive. At the same time, it brings people in. It does not exclude them. Our product range stretches from pure super sports cars to versatile SUVs. Yet every single one of them is unmistakably Porsche. We are able to build highly individual handcrafted vehicles. We are also able to scale at the highest level. That combination is unique. Now Jochen will explain how we intend to translate this unique position into financial performance. Thank you.
Good morning, everyone, and thanks again for joining us today in our Capital Markets Day here in Weissach and also out there in the live stream. You have heard from Michael and my colleagues how Strategy Sportwagenschmiede 2035 will strengthen our products offering, our competitiveness, and our brand. Now, ladies and gentlemen, let's talk financial performance. I would like to bring these building blocks back together from a financial perspective. Our focus is clear: stronger value creation, greater capital efficiency, and sustainable cash generation. These priorities form the foundation of our midterm and our strategic financial ambitions. The remainder of this decade represents a revitalization phase for Porsche. We're transforming the company from a business affected by restructuring measures, product cycle headwinds, and challenging market conditions into one that is structurally more profitable, more capital efficient, and more cash generative.
A defining characteristic of this transformation is that value creation will be driven primarily by value rather than volume. Together with a disciplined focus on capital allocation, this provides the foundation for Porsche's future earnings and cash flow profile. With the broad availability of new products, we expect revenue growth to outpace unit growth, earnings growth to outpace revenue growth, and cash generation to improve disproportionately. Our midterm ambitions are supported by the execution of our strategy and conservative planning assumptions that reflect the realities of the environment in which we operate. Earlier today, Michael and Matthias outlined the strategic and operational foundations of our top-line ambition and our path to structurally reducing the break-even point to below 200,000 units. Overall, Sportwagenschmiede 2035 provides the foundation of our financial ambitions and the long-term value creation potential of Porsche.
Building on this, I would now like to take you through our financial framework. Our midterm ambitions and the key value drivers that we expect to support resilient earnings growth, cash generation, and shareholder value creation. We expect Porsche to continue operating in a more challenging and a more volatile environment with elevated uncertainty across global markets and the automotive industry. To ensure that our midterm ambitions are robust and credible, we have deliberately based them on conservative and risk-conscious planning assumptions. Let me be very clear. Our midterm profitability ambition is not new. It has not changed. We continue to target a double-digit group EBIT margin with the potential to reach up to 15% in a favorable business environment. What has changed is the strength of the foundation supporting this ambition. Sportwagenschmiede 2035 gives us stronger self-help levers across earnings, capital efficiency, and cash generation.
At the same time, our planning is based on a deliberately more conservative set of assumptions. These incorporate stronger foreign exchange headwinds, structurally lower volumes in China, and a higher regulatory cost burden. They also reflect persistently high depreciation and amortization , and in line with our value over volume strategy, lower fixed cost absorption. We are not changing our profitability ambition. We are putting on more robust foundation and strengthening the path towards achieving it. At the same time, we are sharpening our focus on cash generation. That is why we are additionally introducing a midterm ambition of automotive net cash flow margin of 9%-12%. Now let me put these ranges into perspective. Based on our current assumptions and the external headwinds I've just outlined, we currently see profitability and net cash flow margin more likely settling within the lower bracket of these ranges in the midterm.
Again, this does not represent a new target or change to our ambitions. It simply reflects where within these ranges we currently see the more likely outcome under our base case assumptions. As we have consistently communicated since last year, the upper part of our ambition ranges remains achievable in a more favorable business environment. Reaching a group EBIT margin of up to 15% and a net cash flow margin of up to 12% would require a more supportive macroeconomic, geopolitical, and regulatory backdrop and/or the successful execution of additional value creation initiatives beyond those currently embedded in our planning assumptions. This is where Sportwagenschmiede 2035 becomes particularly important. It is designed to structurally strengthen Porsche's earnings power, capital efficiency, and cash generation. As we execute our strategy, our focus will increasingly move from recovery and stabilization towards sustainable value creation.
Over time, our value creation will be driven less by volume and increasingly by elevated positioning, margin expansion, higher capital efficiency, and improved revenue quality. This is the path towards our long-term strategic ambition, a group EBIT margin of 15% and an automotive net cash flow of 12%. Now let me continue with our midterm top-line ambition. Based on our current planning assumptions, we target group revenues of EUR 41 billion-EUR 45 billion in the midterm. Importantly, this growth is not driven by higher volumes. It's driven by a stronger price and mix profile, a structurally higher quality of revenues. Our value over volume approach is supported by a more focused and exclusive product portfolio, continued pricing and mix improvements, higher personalization rates, and the growing contribution from high vehicle segments.
Based on our planned product launches and current market assumptions, deliveries are expected to gradually recover to approximately 2025 levels in the midterm, while revenue growth outpaces volume growth. We expect a clear increase in revenue per vehicle over time. This will be driven by a richer product mix, sustained pricing power, increase in personalization, and optional equipment penetration, as well as a higher contribution from our most attractive vehicle segments. Importantly, this is consistent with the portfolio assumptions Michael and Matthias presented earlier, including a higher share of D and E segment vehicles. Let me reiterate another important assumption behind our planning. The regional mix will be structurally different from what we have seen in the past. China, in particular, is expected to represent less than 10% of global unit sales by the end of this decade.
In short, we are not targeting revenue growth by selling more cars. We are targeting growth by creating more value per car. That is the essence of our value over volume strategy. Now top line is one. Resilience is another important aspect. In an environment characterized by greater volatility and uncertainty, it is becoming an increasingly important competitive advantage. That is why we are systematically strengthening our pricing power, improving portfolio efficiency, streamlining our organization, and further optimizing our value chain. Together, these measures enable us to reduce Porsche's break-even point to below 200,000 units. This not only enhances earnings resilience, but also strengthens our ability to generate attractive returns and cash flow across a wide range of market conditions. Ladies and gentlemen, let me now turn to profitability.
The bridge on this page illustrates how the individual drivers of Sportwagenschmiede 2035 contribute to our midterm ambition to deliver a group return on sales of 10%-15%. Starting from our 2025 baseline, including the well-known extraordinary expenses for our strategic realignment, we assume that profitability will be impacted by a structurally lower China business. Our planning assumptions also incorporate significant external headwinds, including adverse foreign exchange developments, margin pressures resulting from the current regulatory framework, including CO2 compliance requirements and U.S. tariffs, as well as persistently high depreciation and amortization levels. This also includes our expectation that R&D capitalization will stay below D&A on capitalized R&D for the time being. These factors also expected to weigh on fixed cost absorption. At the same time, we have to expect continued inflationary pressure across the supply chain and on other costs.
However, we are confident that our measures my colleagues outlined earlier, including material cost initiatives, efficiency improvements across sales and R&D, and the benefits from the Zukunftspaket, will more than offset these headwinds. Importantly, our ambition does not depend on external tailwinds. The key drivers of earnings improvements are largely within our own control. A richer price and mix profile, disciplined cost management, and the benefits from the strategic initiatives embedded in our strategy. Against this backdrop, our midterm ambition reflects our prudent and risk-conscious assessment of the current operating environment. Performance towards the upper end of the range remains achievable but would likely require a more supportive macroeconomic, geopolitical, and regulatory backdrop and/or the successful implementation of additional value creation measures. As a result, the next phase of Porsche's development is not a recovery story, it's a value creation story.
We believe margin expansion remains achievable despite limited volume growth, supported by premiumization, higher revenue quality, disciplined capital allocation, and continued improvements in operational efficiency. This underpins our long-term strategic ambition of returning to a 15% group return on sales. Another key pillar of Sportwagenschmiede 2035 is a step change in capital allocation discipline across both CapEx and R&D. Through greater portfolio focus, higher R&D efficiency, reduced product complexity, and increased digitalization, we expect to significantly improve resource allocation and lower investment intensity across the business. Accordingly, investments are expected to remain elevated in 2026 before declining materially thereafter. We target a reduction in combined automotive CapEx and R&D spending from around EUR 4.4 billion in 2025 to EUR 3.5 billion-EUR 4 billion in the midterm. This will support stronger cash generation, higher capital productivity, and improved returns on capital employed.
Importantly, this is not about investing less, it is about investing better. We remain fully committed to strengthening our product portfolio, advancing technology and preserving Porsche's innovation leadership while applying a more rigorous focus on value creation, capital efficiency and returns. This targeted improvement of capital efficiency is the decisive basis for increased strategic and financial flexibility. We are sharpening investment discipline across the business, allocating capital more selectively, reducing complexity and leveraging partnerships to lower funding requirements while preserving strategic flexibility. Consequently, investment intensity is expected to decline significantly while depreciation and amortization remain elevated as prior transformation and BEV investments continue to flow through the P&L. This dynamic supports a structurally stronger financial profile, less capital tied up in the business, improved cash conversion, and a higher capital productivity. Ultimately, this is expected to strengthen returns on our invested capital and support long-term value creation.
Let me finally turn to what is ultimately the clearest financial outcome of successfully executing our strategy, cash generation. Starting from an automotive net cash flow margin of 4.7% and substantial cash outs for the strategic realignment in 2025, we expect a significant improvement driven by three main factors. First, stronger operating performance. Second, a substantial reduction in capital intensity through lower CapEx and capitalized R&D. Third, continued discipline in working capital and financial investments. These benefits more than offset the expected headwinds from lower unit sales in China and adverse geopolitical and macroeconomic developments such as FX. As a result, we target an automotive net cash flow margin of 9%-12% in the midterm. Importantly, this ambition already includes annual pension contributions in the low triple-digit million euro range.
Looking beyond the midterm, the full implementation of our strategy provides a pathway towards our strategic ambition of 12% automotive net cash flow margin. If there is one chart that captures the financial logic of Sportwagenschmiede, it is this one. Higher earnings quality, significantly lower capital intensity, and stronger cash conversion, driving a step change in Porsche's cash generation and long-term value creation. It is what ultimately provides the financial flexibility to invest in the future, maintain a strong balance sheet, and deliver attractive returns to shareholders. Let me conclude by bringing together midterm and strategic ambitions. As outlined throughout the presentation, our midterm ambitions are based on conservative and risk-conscious assumptions. They reflect a business environment that is expected to remain challenging, including continued pressure in China, a stronger euro, elevated regulatory costs, and structurally higher depreciation and amortization levels resulting from our former BEV and transformation investments.
Against this backdrop, we target group revenues of EUR 41 billion -EUR 45 billion, group return on sales of double digit to 15%, and an automotive net cash flow margin of 9% - 12% in the midterm. Sportwagenschmiede 2035 is specifically designed to strengthen our earnings quality, improve capital efficiency, and increase cash generation. As execution progresses and assuming a more supportive macroeconomic, regulatory, and market environment, we see a pathway back to our long-term strategic ambition of 15% return on sales and 12% net cash flow margin. What is important, strong cash generation creates strategic flexibility and underpins our disciplined capital allocation framework. Our priorities remain unchanged: invest in the business, maintain balance sheet strengths, and deliver attractive shareholder returns. Reflecting our confidence in Porsche's future cash generation potential, we have increased our targeted dividend policy to a payout ratio of at least 50% of group profit after tax.
Beyond this, we retain the flexibility to deploy capital opportunistically where it creates additional shareholder value. Looking ahead, investment intensity is expected to stay elevated this year and then decline progressively, supported by tighter capital discipline, clear portfolio prioritization, and a more focused allocation of resources. At the same time, we are committed to further strengthening our financial position through pension funding and a continued robust net liquidity target of 15% -2 0% of automotive revenues. In short, stronger cash generation, lower capital intensity, and a disciplined capital allocation will provide Porsche with greater strategic flexibility while supporting attractive, sustainable shareholder returns. With this, I hand over to Michael again. Michael, you bring it over the line.
Thank you, Jochen. Ladies and gentlemen, as I mentioned at the beginning, what we are doing here will not happen overnight. There will first be a transition phase in which we make Porsche more competitive with hard cost work and a streamlined organization. In parallel, we have to close the gap in the product lineup, which is 718 and the ICE Macan. Then the next chapter comes with our new generation of products. That is when we expect to see the real momentum. Sportwagenschmiede 2035 is designed to strengthen Porsche from the inside out. Think of it as a puzzle. We have talked about many different elements this morning. Each of them is important, but none of them makes much sense in isolation. Only together do they create a complete picture. This is that picture. This is our story. This is Sportwagenschmiede 2035.
It is what makes Porsche a distinctive investment case with a unique combination of strong profitability and excellent cash performance potential. Before I come to a last thought, I would like to say thank you. Thank you for being with us today, for your interest, and the trust you place in Porsche. We appreciate your continued support and your confidence in our company. We look forward to continuing this dialogue with you, maybe this afternoon during the Q and A session. Now, let me leave you with a final thought. Porsche has always had a unique identity. At its heart is a genuine love for sports cars. That has always been our starting point. Times change, technologies evolve, markets move. Yet throughout our history, whenever we needed an answer, we found it at the drawing board through our work, and we will continue to do so.
That is why we have no choice. Whatever we build will always turn out to be a sports car. It will continue as always. There is no shortage in opinions. Opinions on what Porsche should and should not do. But honestly, who is to say?
[Presentation]
Ladies and gentlemen, thank you very much for your participation in the first part. This concludes now the live stream of the presentations. We will continue at 3:30 P.M. Central European Time with the Q and A session. We very much look forward to welcome all of you back then. Thank you.