- Porsche's operating return plunged from 14.1 percent in 2024 to just 1.1 percent in 2025.
- Skoda matched its 2024 performance, maintaining an 8.3 percent operating return on sales.
- An auto analyst says the Czech automaker has effectively become the Volkswagen Group's new Porsche.
Porsche was once Volkswagen Group's undisputed profit machine. Now, the sports car maker has been overtaken by Skoda on one of the most important measures of profitability. That's not just a cheeky comparison. Automotive analyst Matthias Schmidt points out that Skoda has effectively become the new Porsche within the Group. And unlike some automotive hot takes, compelling data backs it up.
In 2025, Skoda reported an operating return on sales of 8.3 percent, matching the previous year's performance. Porsche, meanwhile, saw its operating return on sales plummet from 14.1 to 1.1 percent. That's quite the reversal for two brands sitting at opposite ends of the VW Group's enormous portfolio, so there's truth to the auto analyst's statement in an interview with Reuters: "The Czech brand has effectively become the new Porsche of the Group."
There's an important distinction here. Both Skoda and Porsche report operating return on sales, which is essentially operating profit divided by sales revenue. So, comparing Skoda's 8.3 percent with Porsche's 1.1 percent is an apples-to-apples comparison of their operating performance.
Operating Return On Sales Vs Profit Margins
Calling those numbers simply "profit margins" can be misleading because profit margin can refer to different things depending on whether you're talking about operating profit, profit before tax, or net income after taxes and other expenses. While "profit margin" is perfectly understandable, operating return on sales is the more accurate term here.
And whichever terminology you use, the gap is difficult to ignore after Porsche's profit machine stalled. For 2026, the Zuffenhausen brand expects things to pick up, with an operating return on sales projected at anywhere between 5.5 and 7.5 percent.
However, the company is being squeezed from several directions at once. Demand in China has weakened substantially, competition has intensified, tariffs are adding costs, and Porsche's expensive transition toward electric vehicles hasn't gone according to plan. It's now responding with a "value over volume" strategy, focusing on higher-margin vehicles rather than chasing sales at all costs.
The problem is that you still need customers willing to pay Porsche money. Meanwhile, Skoda's business model produces an operating return more than seven times higher than the more illustrious brand from Stuttgart. That doesn't mean a Skoda is suddenly more profitable per vehicle than a Porsche. It also doesn't mean Skoda has become a premium brand. The companies have completely different pricing, product, and cost structures. It does, however, demonstrate just how dramatically Porsche's profitability has deteriorated.
Skoda Is Doing The Boring Stuff Right
The reversal is particularly awkward for the Group because Porsche was supposed to be one of its crown jewels. Skoda, meanwhile, is quietly doing the boring stuff right, with heavy hitters such as the Octavia and an influx of more affordable EVs helping drive strong results.
In Porsche's defense, the 1.1 percent operating return was heavily affected by "extraordinary expenses of approximately 3.9 billion euros" in 2025. While low, the 1.1 percent figure shouldn't be interpreted as Porsche's normal long-term earning power.
Skoda's 8.3 percent, meanwhile, wasn't achieved through a one-off windfall. It matched the previous year's level and came alongside record revenue, record operating profit, and more than one million deliveries.
Different Strokes For Different Folks
As for Skoda being the new Porsche, it obviously won't become a halo brand. A Superb isn't a Panamera, and a Kodiaq isn't a Cayenne. And nobody will mistake a Skoda showroom for a Porsche dealership. But that's not really the point. Porsche's importance to the Group was never just about the cars. It was about the money those cars generated. For years, Porsche was the brand the Group could point to when it wanted to demonstrate what a premium automaker could contribute to the wider conglomerate. Its enormous margins helped justify its lofty valuation and made it one of VW's most valuable assets.
Now, that formula has hit a serious roadblock. Porsche is spending billions to realign its product strategy, adjust its EV plans, cope with weaker demand in China, and protect its position in an increasingly competitive luxury market. Meanwhile, Skoda is doing something considerably less glamorous but arguably more useful: selling practical cars at attainable prices while consistently generating a healthy operating return.
That's what makes the comparison so interesting. Skoda doesn't need to become Porsche. It simply needs to keep doing what it is already doing well while Porsche works to rebuild the profitability that once made it the Group's crown jewel. Porsche still has an enormous brand with a legendary sports car in the 911, and the potential to recover.
2024 Skoda Superb
Motor1's Take: There's something almost poetic about Skoda becoming the financial overachiever while Porsche struggles to rediscover its mojo. Porsche built its reputation within the Group on the ability to turn expensive cars into enormous profits. Skoda has taken the opposite route, selling more attainable cars while keeping its operating return remarkably consistent. That's a pretty compelling trick when the wider Group is under pressure to cut costs and improve profitability.
The 1.1 percent figure also deserves an asterisk because Porsche's extraordinary expenses dragged down its 2025 result. Still, even after acknowledging that caveat, the contrast with Skoda's 8.3 percent is hard to overlook.
