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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowCarmaker Stellantis, the world’s fourth largest carmaker, slashed its earnings forecast on Monday, citing investments to turn around its U.S. operations amid a wider industry slump and increased Chinese competition.
Stellantis said it was accelerating efforts to turn around North America, including bringing dealer inventory levels to no more than 300,000 vehicles by the end of the year, instead of the first quarter of 2025 as previously planned.
The action is in the back of a decrease in shipments of 200,000 vehicles in the second half of this year compared with a year earlier, twice as many as the company had forecast. The company will offer higher incentives on 2024 and older models.
Stellantis has about 11,000 salaried workers in the U.S. at 20 plants, including four in operation in Indiana—all in Kokomo—that employ more than 6,000 workers.
In its profit warning, Stellantis said it expected to finish the year with a negative cash flow of 5 billion euros to 10 billion euros, ($5.6 billion to $11.2 billion) instead of positive.
The carmaker, which was created in 2021 from the merger of PSA Peugeot with Fiat Chrysler Automobiles, also dropped its operating profit margin guidance to 5.5% to 7.0%, instead of double digits.
Stellantis shares were down 14.45%, trading on midday Monday in Milan at 12.45 euros.
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 a dismal first-half financial performance. The company has portrayed the search as a normal leadership succession plan.
UAW leadership met last week to review contract violations and what they called illegal behavior by Stellantis. UAW President Shawn Fain advised Stellantis in a letter that the union is moving toward a strike. An autoworkers’ strike last year cost the company 3 billion euros ($3.2 billion) in revenues.
Stellantis is also under pressure in Italy, home to one of the main shareholders, due to production cuts. Autoworkers announced a one-day strike on Oct. 18.
The company reported that first-half net profits were down 48% compared with the same period last year. First-half sales in the United States were down nearly 16%, even though overall new vehicle sales rose 2.4%.
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What do you expect when the dealerships are starved for product. Not having replacements for the renegade or Cherokee was a bad decision on the Jeep manager’s part. Chrysler currently has one model unless you call the Voyager a separate model but it’s just the same as a Pacifica with the old tail lights and old grill.
They also got greedy during covid inject their prices up exponentially and yet are slow to lower them back down.
This.
The UAW can call out the company but there hands are tied like every auto brand. Consumers are car broke and upside down on any vehicle bought in the last three years. Besides Toyota and Honda nobody is buying these overpriced cars and trucks. You going to strike on top of strike? That’s a great way achieve nothing.