Stellantis slashing financial outlook amid industry slump, Chinese competition - Action News
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Stellantis slashing financial outlook amid industry slump, Chinese competition

Stellantis said it was accelerating efforts to turn around North America, including bringing dealer inventory levels to no more than 300,000 vehicles by the end of the year.

Company also looking for new CEO to succeed Carlos Tavares

A photo of the Stellantis headquarters sign
The Stellantis sign is seen outside the Chrysler Technology Center on July 19, 2021, in Auburn Hills. (Carlos Osorio/AP)

Stellantis, the world's fourth largest carmaker, slashed its earnings forecast on Monday, citing investments to turn around its U.S. operations amid a wider industry slump and increased Chinese competition.

Stellantis said it was accelerating efforts to turn around North America, including bringing dealer inventory levels to no more than 300,000 vehicles by the end of the year, instead of the first quarter of 2025 as previously planned.

The action is in the back of a decrease in shipments of 200,000 vehicles in the second half of this year compared with a year earlier, twice as many as the company had forecast. The company will offer higher incentives on 2024 and older models.

In its profit warning, Stellantis said it expected to finish the year with a negative cash flow of 5 billion euros to 10 billion euros, ($7.5billion Cdnto $15billion Cdn) instead of positive.

The carmaker, which was created in 2021 from the merger of PSA Peugeot with Fiat Chrysler Automobiles, also dropped its operating profit margin guidance to 5.5 per centto 7per cent, instead of double digits.

Stellantis shares were down 14.45 per cent, trading on midday Monday in Milan at 12.45 euros ($18.75 Cdn)

The struggling maker of Jeep and Ram is looking for a new CEO to succeed Carlos Tavares, who is under fire from U.S. dealers and the United Auto Workers union after a dismal first-half financial performance. The company has portrayed the search as a normal leadership succession plan.

UAW leadership met last week to review contract violations and what they called illegal behaviour by Stellantis. UAW President Shawn Fain advised Stellantis in a letter that the union is moving toward a strike. An autoworkers' strike last year cost the company 3 billion euros ($4.5billion Cdn) in revenues.

Stellantis is also under pressure in Italy, home to one of the main shareholders, due to production cuts. Autoworkers announced a one-day strike on Oct. 18.

The company reported that first-half net profits were down 48 per centcompared with the same period last year. First-half sales in the United States were down nearly 16 per cent, even though overall new vehicle sales rose 2.4 per cent.