Dive Brief:
- Stellantis lowered its 2024 guidance on Monday, citing corrective actions to improve performance in North America, according to a press release.
- The automaker aims to have no more than 330,000 units of dealer inventory in the U.S. by the end of the year. It is planning shipment declines of more than 200,000 units in the second half of the year, up from the 100,000 units initially forecast.
- Stellantis now expects an adjusted operating income margin between 5.5% and 7%, down from a double-digit margin. The company added that lower-than-expected sales performance in the second half of the year will also contribute to the reduced margin.
Dive Insight:
Stellantis is attributing about two-thirds of the reduced margin to its actions in North America, however it’s not the only area of concern for the automaker. There’s also a deterioration in the global industry dynamics, the company said, in addition to more intense competition in China and a higher industry supply overall.
In North America, Stellantis will increase incentives on 2024 and older model year vehicles, and implement productivity improvement initiatives that encompass both cost and capacity adjustments, the release said. The company’s Dodge, Jeep and Chrysler brands have some of the highest days’ supply of inventory in the industry, according to Cox Automotive.
Additionally, the automaker said it no longer expects to have positive industrial free cash flow. Instead, Stellantis plans to lose between 5 billion euros to 10 billion euros.
“The Company will continue to leverage and expand its competitive differentiators and believes that the recovery actions being put in place will ensure stronger operational and financial performance in 2025 and beyond,” Stellantis said in the release.
Stellantis’ net profits for the first half of 2024 fell by 48% year over year, according to a July earnings report. Its operating income margin dropped to 11.4% for the period, which is still higher than its anticipated margin for the full fiscal year.
“This is a bump on the road that we are now fixing and that we are going to fight against to make sure that we can rebound from here and that we fix the operational issues that we face,” CEO Carlos Tavares said during the company’s earnings call in July.
