A Stellantis sign is seen outside FCA's headquarters and technology center in Auburn Hills, Michigan, on January 19, 2021.
Jeff Kowalski | AFP | Getty Images
Shares in European automakers fell on Monday after Stellantis and British luxury brand Aston Martin issued profit warnings, citing broader industry challenges and difficulties in China, the world's largest car market.
Stellantis on Monday trimmed its annual guidance for 2024 on the back of deteriorating “global industry dynamics” and strengthening competition from China, which sent Milan-listed shares lower at the open.
The Franco-Italian group, known for brands such as Chrysler, Dodge, Jeep and Maserati, warned of lower-than-expected sales “in most regions” in the second half of the year. It now expects an adjusted operating income (AOI) margin of 5.5% to 7.0% for the full-year 2024 period, down from a “double-digit” forecast.
“The deterioration in the global industry backdrop reflects lower market expectations for 2024 than at the beginning of the period, while competitive dynamics have intensified due to higher industry supply, as well as increased Chinese competition,” the automaker said.
It also lowered its industrial free cash flow forecast to a range of negative €5 billion ($5.58 billion) to negative €10 billion, from previously “positive” guidance, as a result of lower expected profit margin and temporarily higher working capital. During the second half of this year.
The automaker also attributed the revisions to its guidance of “decisions to significantly expand remediation procedures for performance issues in North America,” but did not provide additional details. Earlier this year, U.S. shareholders filed a lawsuit against Stellantis, alleging that the automaker defrauded them by concealing rising inventories and other items, Reuters reported.
This month, the U.S. Stellantis dealer network criticized CEO Carlos Tavares for the company's recent sales decline and factory production cuts, among other decisions they assessed as detrimental to the automaker's business.
The automaker's stock closed down 14.7% on Monday.
British luxury carmaker Aston Martin, whose iconic models gained notoriety through their appearances in the James Bond film series, also signaled cuts to its profit margin and production target for this year.
It announced a cut of nearly 1,000 units in response to “supply chain disruption and continued macroeconomic weakness in China,” forecasting that its 2024 earnings before interest, taxes, depreciation and amortization (EBITDA) will now come in lower than the previous year. performance.
The company said it no longer expects to achieve positive free cash flow in the second half of this year, and noted that full-year gross profit margin is expected to come in at less than 40%, compared to the previous target at that mark.
Aston Martin said it “addresses supply chain challenges and continues to recognize the significant market opportunities represented by China as its macroeconomic environment improves.”
The company's shares closed down 24.5% on Monday, the worst one-day decline since March 2020 according to LSEG data.
Stellantis and Aston Martin's profit warnings come days after German carmaker Volkswagen cut its annual forecast again on Friday, which now sees an operating return on sales of 5.6% in 2024, from a previous 6.5-7.0% range.
In a stock exchange report translated by Google, it attributed its lower expectations to late developments in passenger car and commercial vehicle brands, along with “the deterioration of the macroeconomic environment, which has led to increased risks, especially for the core group of brands.”
European automakers are struggling to maintain their position in China, with their own automakers now aiming to expand sales of their electric cars in Europe. ING analysts warned at the start of this month that the broader shift to electric vehicles “puts European automakers under increasing pressure while total new car sales fail to return to pre-pandemic levels in their home markets.”
Volkswagen shares fell about 2% as markets closed in London.
