By Makini Brice
PARIS (Reuters) – Stellantis NV on Monday cut its full-year forecasts and said it would burn more cash than expected, citing worsening industry trends, higher costs to overhaul its U.S. business and Chinese competition in electric vehicles.
In warning of lower-than-expected profits, Stellantis joins rivals BMW, Mercedes and Volkswagen, which just days ago cut their full-year outlook for the second time in three months.
British luxury car maker Aston Martin also issued a full-year profit warning on Monday, citing supply chain disruptions and weakness in China.
The downward revisions to profit expectations come as the European Union finalizes plans on possible tariffs on Chinese electric vehicles.
Stellantis said it cut expectations for positive free cash flow and now expects to burn between 5 billion and 10 billion euros in cash this year, after cutting operating profit margin expectations.
Stellantis said its adjusted operating profit margin will be 5.5% – 7.0% this year, mainly due to the decision to accelerate the normalization of inventory levels in the United States.
The owner of the Chrysler, Dodge, Jeep, Fiat, Citroen and Peugeot brands has pushed back its target of no more than 330,000 dealer inventory units to the end of 2024.
To that end, it will reduce shipments to North America by more than 200,000 units annually in the second half, doubling its previous guidance. It will offer higher incentives for 2024 and older vehicles and invest to improve productivity.
Operating profit margin will also be hit by lower-than-expected sales in the second half of 2024 in most regions, the French-Italian carmaker said.
“Competitive dynamics have intensified due to both rising supply in the industry and increased Chinese competition,” Stellantis said in its commentary.
Earlier this year, Stellantis shareholders in the U.S. sued the automaker, saying the company defrauded them by hiding rising inventories and other weaknesses before reporting disappointing profits that caused the stock price to fall.
The automaker also announced in August that it would lay off as many as 2,450 factory workers from its assembly plant outside Detroit as it halts production of its Ram 1500 Classic truck.
($1 = 0.8955 euros)
(Reporting by Makini Brice, Tassilo Hummel and Valentina Za; editing by Jan Harvey editing by Louise Heavens)
