Stellantis Lowers 2024 Profit Forecast and Expands Inventory Cuts

Stellantis has revised its profit forecast for 2024 amid growing challenges in the North American market. The company announced that its operating income margin, originally expected to reach double digits, is now projected to fall between 5.5% and 7% for the year. This reduction is primarily attributed to corrective actions taken in North America, which account for about two-thirds of the revised outlook.

The company also adjusted its expectations for industrial free cash flow, projecting a shift from an optimistic forecast to a negative range of approximately $5.57 billion (€5 billion) to $11.14 billion (€10 billion). Stellantis explained that this downgrade reflects strategic decisions and market conditions affecting its global operations.

U.S. Inventory Cuts and Shipment Reductions – 

One of Stellantis’s key actions is to further reduce its U.S. inventory levels. The automaker is targeting no more than 330,000 units in dealer inventory by the end of 2024. This is an accelerated timeline compared to the company’s earlier goal of reaching that level by the first quarter of 2025.

In addition to reducing inventory, Stellantis plans to cut over 200,000 vehicle shipments in North America during the second half of 2024—double the 100,000 units announced in previous guidance. These measures address sluggish demand and prevent excess stock at dealerships. Stellantis also intends to increase incentives on 2024 and older model-year vehicles to support this strategy, encouraging potential buyers to clear out existing inventory.

The automaker is also focusing on improving productivity through cost-cutting and adjustments in its manufacturing capacity. These initiatives are part of a broader effort to remain competitive and weather the current market downturn.

Industry Challenges and Workforce Reductions – 

The revised financial outlook and planned inventory cuts come as Stellantis faces several challenges, including intensified competition from Chinese automakers and a broader slowdown in the global automotive market. These factors have led to difficult staffing decisions, with the company recently announcing layoffs of union-represented workers at some U.S. manufacturing facilities and terminated supplemental employees.

Despite these obstacles, Stellantis remains confident in its ability to rebound in the coming years. The company said it will continue to leverage its competitive strengths and believes the recovery measures in place will lead to improved operational and financial performance by 2025.

Stellantis is set to release its third-quarter U.S. sales results soon. Recent trends show a noticeable decline in sales compared to previous reporting periods.

Source: Detroit Free Press