Stellantis shares tumble on profit warning

Shares in Stellantis tumbled in Milan on Monday after the Chrysler, Peugeot and Jeep maker became the latest auto manufacturer to scale back vehicle delivery forecasts this year.

The Netherlands-based company, which was formed in 2021 from the merger of Fiat Chrysler Automobiles and PSA Group, said it is now targeting no more than 330,000 units of dealer inventory by the end of the year, bringing forward that target from the first quarter of 2025 due to a planned normalisation of inventory levels in the US.

The company pointed to North American shipment declines of more than 200,000 vehicles in the second half of 2024, up from earlier guidance of a 100,000 decrease.

"Deterioration in the global industry backdrop reflects a lower 2024 market forecast than at the beginning of the period, while competitive dynamics have intensified due to both rising industry supply, as well as increased Chinese competition," Stellantis said.

In addition to the lower North American shipments, the company said it was planning on increasing discounts on 2024 and older models, as well as making productivity improvement initiatives that encompass both cost and capacity adjustments.

As such, the adjusted operating income margin is now expected to average between 5.5% and 7.0% for the full year, compared with earlier guidance for a double-digit percentage.

Meanwhile, industrial free cash flow is now estimated to result in an outflow of €5bn to €10bn, compared with previous expectations of positive cash flow generation.

Stellantis's stock was down nearly 13% at €12.68 by 1030 in Milan.

A barrage of automakers have reduced guidance in recent weeks owing to falling sales and fierce competition in the market, with Aston Martin also issuing a profit warning on Monday. That followed a similar announcement by Volkswagen last week, and by Mercedes-Benz and BMW over the past month.