Stellantis reduced its annual forecast, announcing at the same time that it would consume more cash than expected.
Its arguments to justify its financial deterioration: a deterioration of trends in the industry, higher costs to reorganize its activities in the United States and Chinese competition in the electric vehicle sector.
The automotive group resulting from the merger between PSA and FCA said it was abandoning its positive free cash flow forecast, now expecting to burn between 5 and 10 billion euros (or 5.58 to 11.17 billion dollars) in cash this year, after having revised downwards its operating profit margin forecasts.
Downward adjustment of operating margin
Stellantis also said it expects an adjusted operating profit margin of 5.5% to 7.0% this year, mainly due to its decision to accelerate the normalization of inventory levels in the United States.
This revision marks a significant change from the automaker’s previous “double-digit” profit margin forecast.
It reflects the company’s ongoing efforts to adapt to market forces and maintain its financial health in the face of industry headwinds. By acting on employment…
Last August, the automaker announced it was laying off up to 2,450 employees at its assembly site near Detroit, ending production of its Ram 1500 Classic truck.
Stock level normalization
The owner of the Chrysler, Dodge, Jeep, Fiat, Citroën and Peugeot brands has advanced its objective of not exceeding 330,000 units of inventory at dealerships at the end of 2024. To achieve this, it will reduce shipments to the North America by more than 200,000 units compared to the previous year, double the previous forecast.
*The company will also offer higher incentives on 2024 and older model vehicles, while investing to improve productivity.
As a reminder, Stellantis shareholders in the United States sued the manufacturer this year, claiming that the company misled them by hiding rising inventory and other weaknesses before releasing disappointing results causing its stock to plummet. .
Monday’s announcement caused the stock to plunge by more than 14% on the Paris Stock Exchange.
The automotive industry in turmoil
In warning of lower-than-expected profits, Stellantis joins rivals BMW, Mercedes and Volkswagen who recently lowered their annual forecasts for the second time in three months.
Our opinion, by leblogauto.com
Certainly, the international context doesn’t help anything… but let’s remember that while Stellantis’ sales fell sharply in the second quarter in the United States, down 21% compared to last year, all of its main brands sold on the territory – Jeep, Ram, Chrysler and Dodge – suffering sharp declines, the lack of attractiveness of the models had been expressed during meetings of the Stellantis National Dealer Council and in a letter from dealers previously addressed to CEO Carlos Tavares.
These disappointing figures came as Stellantis dealers in the United States expressed their frustration last May with the high-priced vehicles offered by the manufacturer and which, according to them, do not meet consumers’ expectations.
They said they were fed up with expensive vehicles that stay on their property much longer than the industry average, adding that their profitability was taking a hit.
At the end of July, Stellantis Chief Executive Carlos Tavares said the group would take steps to address low margins and high inventories at its U.S. operations and would not hesitate to remove underperforming brands from its portfolio. extensive portfolio.
Sources : Reuters, AFP
