Global Automotive Giant Revises Profit Projections Amid Industry Downturn
In a move to address declining sales and increased competition, Stellantis, the world’s fourth-largest automaker, has revised its earnings forecast downwards. The company, formed in 2021 through the merger of PSA Peugeot and Fiat Chrysler Automobiles, is accelerating its efforts to revamp its North American operations.
To tackle inventory levels, Stellantis aims to reduce dealer stockpiles to 300,000 vehicles by year-end, six months ahead of schedule. This decision comes on the heels of a 200,000-vehicle shipment decline in the second half of the year, double the initial forecast. To stimulate sales, the company will offer increased incentives on 2024 and older models.
The revised profit warning predicts a negative cash flow of €5 billion to €10 billion (approximately $5.6 billion to $11.2 billion) for the year, a significant departure from initial expectations. Operating profit margin guidance has also been adjusted to 5.5% to 7.0%, down from double-digit projections.
Stellantis, manufacturer of iconic brands Jeep and Ram, is currently seeking a new CEO to succeed Carlos Tavares, who has faced criticism from U.S. dealers and the United Auto Workers union following a disappointing first-half financial performance. The company has characterized the search as a routine leadership succession plan.
Meanwhile, Stellantis is under pressure in Italy, where one of its main shareholders is based, due to production cuts. Autoworkers have announced a one-day strike on October 18. The company reported a 48% decline in first-half net profits compared to the same period last year, with U.S. sales down nearly 16% despite a 2.4% increase in overall new vehicle sales.
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