Stellantis slashing financial outlook amid industry slump, Chinese competition
Company also looking for new CEO to succeed Carlos Tavares
Stellantis, the fourth largest car manufacturer in the world, lowered its earnings forecast on Monday, attributing the revision to investments aimed at revamping its U.S. operations amid a broader industry downturn and heightened competition from China.
The company announced it is hastening its efforts to improve its North American performance, aiming to reduce dealer inventory levels to no more than 300,000 vehicles by the end of the year, a timeline accelerated from the previously planned first quarter of 2025. This decision follows a decline in shipments of 200,000 vehicles in the latter half of this year compared to the previous year, which is double the company's earlier projections. To incentivize sales, Stellantis will provide increased incentives on models from 2024 and earlier.
In its profit warning, Stellantis indicated it anticipates finishing the year with a negative cash flow ranging from 5 billion euros to 10 billion euros (approximately $7.5 billion to $15 billion CAD) instead of a positive figure.
Following these announcements, Stellantis adjusted its operating profit margin guidance to 5.5 percent to 7 percent, down from previously expected double-digit margins. The company's shares fell 14.45 percent, trading at 12.45 euros ($18.75 CAD) in Milan on Monday afternoon.
The struggling manufacturer of Jeep and Ram vehicles is seeking a new CEO to replace Carlos Tavares, who faces criticism from U.S. dealers and the United Auto Workers (UAW) union following disappointing financial results in the first half of the year. The company has characterized the search for a new leader as a standard succession process.
UAW leadership convened last week to discuss contract violations and what they described as illegal actions by Stellantis. UAW President Shawn Fain informed Stellantis in a letter that the union is moving toward a strike. A previous autoworkers' strike last year resulted in a loss of 3 billion euros ($4.5 billion CAD) in revenues for the company.
In Italy, where one of the main shareholders is based, Stellantis is also facing pressure due to production cuts, with autoworkers planning a one-day strike on October 18.
The company reported a 48 percent decline in net profits for the first half of the year compared to the same period last year, with first-half sales in the United States dropping nearly 16 percent, despite an overall increase of 2.4 percent in new vehicle sales.
