Stellantis and Aston Martin issue profit warnings due to challenges in auto industry and China.

From CNBC: 2024-09-30 05:34:45

European carmakers, Stellantis and Aston Martin issued profit warnings on Monday citing challenges in the industry and struggles in the Chinese auto market. Stellantis cut its 2024 guidance due to intensified competition and lowered sales. It now projects a margin of 5.5%-7.0%, down from double digits, and decreased industrial free cash flow to -5 to -10 billion euros.

Stellantis attributed revisions to lower 2024 market forecasts, increased Chinese competition, and actions to address North American performance issues. The company was also sued by U.S. shareholders for allegedly concealing rising inventories. Stellantis’ U.S. dealers criticized CEO Carlos Tavares for recent sales declines and production cuts, contributing to a 13% stock drop.

Aston Martin, known for James Bond cars, announced profit margin and production target cuts for 2024 due to supply chain disruption and Chinese economic weakness. It anticipates a drop in earnings compared to last year, now not expecting positive free cash flow in the second half, with a gross margin below 40%.

The profit warnings from Stellantis and Aston Martin come after Volkswagen revised its annual outlook, anticipating a lower operating return on sales of 5.6% in 2024. European carmakers are facing increased pressure as Chinese automakers expand EV sales in Europe, affecting total new car sales and market dynamics. Volkswagen shares were down 2.8% at 10:14 a.m. London time.



Read more at CNBC:: Dodge-maker Stellantis drops profit warning