On September 30, Stellantis announced in a statement that it has lowered its financial expectations for 2024 due to a slowdown in global automobile sales and increased competition from Chinese electric vehicle manufacturers.
Stellantis stated, "The competitive landscape in the automotive industry has intensified due to an increase in global vehicle supply and heightened competition from Chinese automakers."
The company now expects its adjusted operating profit margin for 2024 to be between 5.5% and 7.0%, down from the previous expectation of a "double-digit profit margin." The decline in profit margins is largely attributed to restructuring measures implemented in North America, as well as anticipated lower sales across most regions globally in the second half of this year.
At the same time, Stellantis indicated that its expected free cash flow for the entire year of 2024 will be between "negative €5 billion and negative €10 billion," in contrast to previous forecasts of positive cash flow. This primarily reflects the significant decrease in the company's adjusted operating profit margin and the temporary increase in operating capital expected in the latter half of this year.
Stellantis also pointed out that this profit warning reflects its decision to "significantly increase remedial measures for performance issues in North America." The company has expedited plans to normalize inventory levels in the U.S., aiming to reduce dealer inventory to no more than 330,000 units by the end of 2024, compared to the previously set target of the first quarter of 2025.
To reduce inventory levels in the U.S., Stellantis plans to decrease shipments in North America by more than 200,000 units in the second half of 2024 (up from a previous target of 100,000 units). Additionally, Stellantis will increase incentives for both 2024 models and older vehicles, and implement measures to adjust costs and production capacity to enhance productivity.
Just a few days ago, the Volkswagen Group lowered its financial outlook for 2024 for the second time in three months, and now Stellantis has issued a profit warning, which may put additional pressure on the EU as it finalizes plans to impose tariffs on Chinese electric vehicles.
