Stellantis Struggles with Declining Revenues, Inventory Issues
The automotive giant Stellantis reported a significant 27% decline in net revenues for the third quarter, citing lower shipments, unfavorable mix, and pricing and foreign exchange impacts. Despite this setback, the company remains committed to addressing operational issues, particularly in the US market.
US Inventory Concerns
Stellantis has been working to reduce its bloated inventories, especially in the US. The company reported a decrease of 129,000 units between January and September, bringing its total stocks down to 1.3 million. Additionally, US dealer inventory was cut by 80,000 units between June 30 and Wednesday, with a target of slimming down US stocks by 100,000 units by the end of November.
New Models and Quality Challenges
Stellantis is on track to deliver approximately 20 new models this year, despite facing stringent quality requirements that delayed the start of certain high-volume products in Europe. The company is confident that it will soon benefit from its expanded reach and generational new product wave beyond 2025.
Profit Warning and Global Industry Dynamics
In late September, Stellantis issued a profit warning, citing deteriorating global industry dynamics and a push to expand remediation actions on North American performance issues. The company’s Milan-listed shares have tumbled over 42% year-to-date, but saw a slight increase on Thursday morning.
Challenges in the US Market
American car brands Jeep, Ram, Dodge, and Chrysler have been struggling under their European owner, with some of the highest inventories of vehicles on dealer lots in the US. This suggests less consumer demand for the products. Stellantis is currently embroiled in a legal battle with the United Auto Workers over strike threats, adding to the company’s challenges.
Electrification and Competition
Like many in the auto industry, Stellantis is navigating a perfect storm of challenges on the road to full electrification. The company faces faltering global demand for electric vehicles, competition from China, and pressure to meet emissions-reduction targets set to take effect next year. In response, car manufacturers have launched low-cost EV models to boost sales.
A Challenging Road Ahead
As Stellantis works to address its operational issues and adapt to a rapidly changing industry landscape, the company remains committed to delivering on its promises. Despite the challenges, Stellantis is poised to emerge stronger and more resilient in the years to come.
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