MILAN (AP) — Automaker Stellantis, the world’s fourth-largest automaker, cut its profit forecast Monday, citing investments to overhaul its U.S. operations amid a broader industry slump and increased Chinese competition.
Stellantis said it was accelerating efforts to improve North America, including by bringing dealer inventory levels to no more than 300,000 vehicles by the end of the year, rather than in the first quarter of 2025 as previously planned.
The move is behind a drop in shipments of 200,000 vehicles in the second half of this year compared to a year earlier, twice as much 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 end the year with negative cash flow of 5 to 10 billion euros instead of positive.
The automaker, which was formed in 2021 from the merger of PSA Peugeot with Fiat Chrysler Automobiles, also lowered its operating profit margin expectations to 5.5% to 7.0% from double digits.
The struggling maker of Jeep and Ram is looking for a new CEO to succeed Carlos Taveres, who is under fire from U.S. dealers and the United Auto Workers union after dismal financial performance in the first half of the year. The company has portrayed the search as a normal leadership succession plan.
Stellantis is also under pressure in Italy, where one of the largest shareholders resides, due to production cuts. Autoworkers announced a one-day strike on October 18.
The company reported that first-half net profit fell 48% compared to the same period last year. Sales in the United States fell by almost 16% in the first half of the year, even as total new vehicle sales rose by 2.4%.
