Stellantis Warns of Profit Decline, Citing Global Markets and Chinese Competition

By Makini Brice

PARIS – Stellantis NV announced on Monday that it is revising its annual forecasts downward, projecting a more significant cash burn than previously anticipated. This adjustment comes in response to deteriorating industry conditions, rising costs associated with restructuring its U.S. operations, and increased competition from Chinese electric vehicle manufacturers.

The automotive giant’s warning about lower-than-expected profits places it alongside fellow automakers such as BMW, Mercedes, and Volkswagen, the latter of which recently lowered its annual outlook for the second time within three months. British luxury manufacturer Aston Martin also issued a full-year profit warning, attributing its challenges to supply chain disruptions and a sluggish market in China.

These earnings revisions arrive as the European Union is finalizing discussions regarding potential tariffs on Chinese electric vehicles. Stellantis stated it now anticipates a cash burn between 5 billion and 10 billion euros this year, abandoning its previous expectations for positive free cash flow, after also lowering its operating profit margin guidance.

The company estimates its adjusted operating profit margin to be between 5.5% and 7.0% for this year, primarily due to a decision to accelerate the normalization of dealer inventory levels in the United States. Stellantis has advanced its goal of limiting dealer inventory to no more than 330,000 units to the end of 2024.

To address these challenges, Stellantis plans to reduce shipments to North America in the latter half of the year by over 200,000 units compared to the previous year—double its earlier forecast. The company will also offer greater incentives on 2024 and older model vehicles while investing to enhance productivity.

The operating profit margin is expected to be negatively impacted by lower-than-anticipated sales across most regions in the latter half of 2024. Stellantis cited intensified competitive dynamics as a contributing factor, stemming from increased industry supply and heightened competition from Chinese manufacturers.

Earlier this year, U.S. shareholders of Stellantis filed a lawsuit against the automaker, claiming it misled them by concealing rising inventories and other weaknesses prior to reporting disappointing earnings that led to a drop in its stock price.

Moreover, in August, Stellantis announced it would lay off up to 2,450 factory workers at its assembly plant near Detroit due to the cessation of production for its Ram 1500 Classic truck.