Stellantis and Aston Martin Shares Decline Following Profit Warnings from Carmakers

Shares of Stellantis, listed in Paris, experienced a sharp decline, while Aston Martin Lagonda’s stock tumbled in London on Monday following profit warnings from both automakers, largely attributed to weak demand in China.

Stellantis announced that it now anticipates a 2024 adjusted operating income margin of 5.5% to 7.0%, a significant decrease from its previous forecast of a “double-digit” increase. The company indicated that approximately two-thirds of this reduction stems from necessary “corrective actions” in its North American operations. Stellantis also pointed to intense competition in the electric vehicle sector in China, the largest automotive market in the world, and a “deterioration in global industry dynamics.”

Additionally, the company highlighted that lower-than-expected sales performance in the latter half of the year across most regions contributed to the revision. Stellantis further predicted that industrial free cash flow could fall to a negative range of 5 billion to 10 billion euros, in contrast to earlier expectations of a positive outcome. This change is linked to the adjusted operating income outlook and the effects of “temporarily elevated working capital” that are anticipated in the second half of 2024.

Since its formation through the merger of Fiat Chrysler and PSA in 2021, Stellantis has seen a stock decrease of more than 12%.

In a parallel development, Aston Martin Lagonda announced it does not expect to generate positive free cash flow in the first half of the year. The luxury sports car manufacturer also revised its 2024 wholesale volume targets downward due to ongoing supply chain issues, including delays in receiving critical component parts. Despite facing “weak demand” in China, Aston Martin noted that the region still represents a “significant market opportunity” as its economic circumstances improve.

The company’s projections for full-year adjusted earnings before interest, taxes, depreciation, and amortization have been lowered to the “high teen’s percentage,” below the previous estimate of the “low 20s%.” Aston Martin CEO Adrian Hallmark stated that decisive action is required to adjust production volumes for 2024 in response to supplier disruptions, the challenging macroeconomic situation in China, and a strategic re-alignment of production plans for optimal efficiency and more balanced delivery in the future.

Aston Martin’s stock declined by over 28% in morning trading.

These announcements come in the wake of profit outlook downgrades from German automakers Volkswagen, Mercedes-Benz, and BMW earlier this month, also due to challenges in the Chinese market. Additionally, analysts at Stifel have changed their rating for Porsche Automobil Holding, a significant stakeholder in Volkswagen and Porsche AG, from “Buy” to “Hold.”