Stellantis shares plunge as carmaker follows Volkswagen in warning on profits

[mahatmakanejeeves]

Stellantis shares plunge as carmaker follows Volkswagen in warning on profits

By Hanna Ziady, CNN
3 minute read
Published 6:39 AM EDT, Mon September 30, 2024


A 2021 Jeep Grand Cherokee L is assembled at the Stellantis Detroit Assembly Complex-Mack in June 2021 in Detroit. Bill Pugliano/Getty Images

London (CNN) — Shares in Chrysler parent Stellantis plunged almost 14% in Milan Monday after the Italian-American carmaker slashed its forecasts for full-year profitability and cash flow, citing weaker global sales and increased competition from Chinese rivals. ... Stellantis (STLA), which also makes Ram Trucks and Jeep, Citroen and Peugeot cars, said in a statement that it expects to be considerably less profitable in 2024 than it previously predicted and that expenditures would exceed cash flow from operations.

The downward revisions were driven by “corrective actions” in North America, such as “increased incentives” on 2024 and older models and disappointing sales in the second half of the year across most regions, the company added. ... Stellantis said it would reduce inventory levels in the United States and ship 200,000 fewer vehicles to North American dealers in the second half of 2024 than in the same period last year.

“Deterioration in the global industry backdrop reflects a lower 2024 market forecast than at the beginning of the period, while competitive dynamics have intensified due to both rising industry supply, as well as increased Chinese competition,” the automaker added. ... The downbeat update comes after Germany’s Volkswagen cut its full-year outlook for sales and deliveries Friday, citing a “challenging market environment.” Volkswagen’s shares were trading 4.5% lower on the day Monday.

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[BrianTheEVGuy]

1. Maybe they shouldn't have jacked up prices

Both VW and Stellantis are prime greedflation players. A Jeep that was $25K in 2019 is now $45K. Same design, same engine, they just hiked the prices during the pandemic and told customers to pay or forget buying one of their products.

So customers took their business elsewhere. Subaru, Nissan, Honda and Toyota made a LOT of new customers from sticker-shocked loyal Stellantis buyers who couldn’t believe that the company wanted $40K for a base Dodge Charger when Nissan, Toyota, Honda or Subaru charges $25K for a mid sized sedan.

Head on over to a Chrysler, Dodge, Jeep and Ram dealer today and the lot is overflowing with unsold trucks for $80K or more. Demanding that sort of pricing was delusional. Now they’ve moved from FA to FO.

[mahatmakanejeeves]

2. Stellantis Has Way Too Many Unsold Cars

Stellantis Has Way Too Many Unsold Cars
It wants to lower inventory by offering bigger discounts on older cars.

Updated: Sep 30, 2024 at 4:05am ET
By: Adrian Padeanu

Stellantis sales in the United States have dropped by 16% in the first half of this year. Looking at how the American brands fared through June, Jeep fell by 9% while Ram plummeted by 26%. Chrysler suffered an 8% decline and Dodge was down by 16%. Because demand is weak, inventory is rising—which means Stellantis is taking new measures to try and normalize the overflow of unsold cars. ... The company had previously established to limit inventory levels in the United States to 330,000 vehicles by the first quarter of 2025. It now wants to achieve its goal by the end of this year. How? By offering bigger discounts on 2024MY and older cars. That tells us Stellantis has an unspecified number of vehicles sitting on dealer lots for at least two years.

In the second half of 2024, the automotive conglomerate wants to ship 200,000 fewer cars to US dealers than it did in H1 2023. That effectively doubles the number of vehicles compared to the previous estimate made by Stellantis. Who's to blame? The world's fourth-largest car manufacturer cites a "deterioration in the global industry backdrop" while admitting it's facing increasing Chinese competition.

According to an analysis by CarEdge, the Alfa Romeo Giulia is the slowest-selling car in the US considering an inventory supply of 617 days in September. The Stelvio is in third place with 456 days, followed by the Fiat 500e with 454 days. The defunct Jeep Renegade is eighth with a 332-day supply while the Grand Wagoneer L is ninth with enough cars for 327 days. The Dodge Hornet is in tenth place with a 323-day supply. You could probably get a good deal on any of these cars as dealers are eager to get rid of the excess inventory.

Stellantis has updated its outlook for 2024 from a double-digit adjusted operating income margin to anywhere between 5.5% to 7%. Approximately two-thirds of the drop is caused by "corrective actions in North America." Initially projected to be positive, the industrial cash flow is now estimated at -€5 billion to -€10 billion. Yes, with a minus.

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[bucolic_frolic]

3. Automakers have outsourced the components of vehicles

sometimes including the engine! They are automotive assemblers. Only a couple manufacturers design, test, manufacture their own transmissions and engines.

[Eko]

4. I was looking at getting a jeep before the pandemic.

But hesitated. Prices have jumped so that what I wanted was about 45k and is now 65k. No wonder sales are bad.