Renault, Stellantis… On the stock market, the car is losing its way, stop or still?

Renault, Stellantis… On the stock market, the French (and European) automobile sector, faced with numerous headwinds, has been under pressure in recent months. “The ability of car manufacturers to impose their prices (pricing power), undeniable during the post-Covid years, has clearly weakened. And restructuring costs (factory closures, etc.) will weigh on margins», argues Vincent Marioni, director of credit investments at the German asset management giant Allianz Global investors, who says “cautious about the sector».

In a context where many households have persistent purchasing power problems, the levels reached by vehicle sales prices “have become a problem for consumers. Car manufacturers therefore sell more, cheaper cars, on which they make less margin.», Explains the expert, who emphasizes that the profitability and cash generation of manufacturers are logically affected. Certainly, they implement savings measures, but which “are not enough to offset market headwinds”he laments.

Risk of trade war, rise of Chinese competition… Headwinds for Stellantis and Renault

French and European car manufacturers are definitely well tested, especially since the forced migration towards electric vehicles constitutes a large and expensive challenge (heavy investments have been made, while many drivers are reluctant to trade in a motor car thermal for an electric model, often considered relatively expensive). In addition, Chinese manufacturers, with aggressive prices, “gain ground and market share», underlines Vincent Marioni. Finally, Donald Trump recently raised the specter of a trade war, capable of penalizing European automobile manufacturers.

Stellantis has uncertain prospects and risks falling further on the stock market

Stellantis disappointed its shareholders at the end of September by issuing a profit warning. AlphaValue highlights the difficulties encountered in the United States, where inventory reduction measures have affected the performance of the Franco-Italian-American manufacturer. Stellantis is in the process of effectively reducing its inventories, but the research office says it is waiting for the full annual accounts for 2024 to gauge the impact of rebates on profitability. For its part, the broker Bernstein is not buying the Stellantis share, considered close to its estimated fair price (the broker's price target is 11 euros, based solely on fundamentals).

Renault is doing poorly on the stock market, despite relative resistance

At this stage, Renault is the only European car manufacturer to have confirmed its objectives for 2024, a notable sign of resistance, in the eyes of AlphaValue, for which Renault should return to a “quality business“. In addition, the manufacturer has seen its situation improve in recent years and its balance sheet has strengthened. Furthermore, the planned launches of new models for 2025 encourage optimism, according to the broker Jefferies, which however lowered its profit and dividend estimates for Renault. The broker's price target for Renault shares was therefore logically revised downwards.

Momentum readers were warned very early of the risk of stock market plunges by Stellantis and Renault

Readers of Momentum, Capital's daily premium investment letter on the stock market, were warned well in advance of the high risk of a plunge in the stock prices of Stellantis and Renault, which materialized. Discover in Momentum our recent analyzes on the prospects for Stellantis and Renault shares. And find every day our expectations on the CAC 40 and stocks listed on the stock exchange. Right now, exceptionally, take advantage of a 40% reduction on the price of an annual subscription. To take advantage of it, simply click on the link inserted above in this article.