It’s not just Volkswagen that is suffering from growing competitive pressure on the global car market. Stellantis, Europe’s second largest volume manufacturer with brands such as Peugeot, Opel and Fiat, also issued a warning shot on Monday and revised its financial targets downwards. Instead of at least ten percent, only a profit margin of 5.5 to seven percent, adjusted for special effects, is expected in the current financial year, the group announced on Monday morning. That would be halving compared to 2023. At that time, Stellantis still had a margin of 12, 8 percent shined – an amount that is usually only reserved for premium manufacturers such as Mercedes or BMW. The downwardly revised target margin also has consequences for free cash flow in the industrial business. It is likely to become negative at minus five to ten billion euros instead of remaining positive, as previously expected. The stock market reaction was clear. At the start of trading, the Stellantis share price fell by more than twelve percent. Investors had been preparing for falling profitability for months: until March, the price was still cheering, but since its all-time high in March, the price has now lost more than half of its value. At just under 36 billion euros, the market value is again significantly below that of Volkswagen. High inventories In the first half of the year, Stellantis’ margin had already fallen to ten percent and its net profit had fallen by 48 percent to just under 5.6 billion euros compared to the same period last year. The group is not only concerned about the situation on the European car market, but also its North American business. There, its US brands such as Jeep, Chrysler and Dodge have recently lost market share and the profitability of several factories is being put to the test. According to the management, the latter is also the main reason for the target correction that has now been announced. About two-thirds of the lower margin was “due to corrective measures in North America,” she said on Monday. Stellantis is sitting on high inventories there. Instead of 100,000, deliveries in North America are likely to decline by more than 200,000 vehicles in the current second half of the year compared to the same period last year. Concerns in North America – Tavares shortens vacation Stellantis now wants to respond, among other things, with “initiatives to increase productivity that include both cost and capacity adjustments “. The problems in North America have been bothering the management for some time. According to the French newspaper “Les Echos”, CEO Carlos Tavares shortened his summer vacation in August to hold talks in Detroit. More on the subject The Portuguese, who has been at the helm of Stellantis since the multi-brand group was founded at the beginning of 2021, has not been sitting since the recent downward trend as secure in his chair as before. According to a report by the financial service “Bloomberg”, Chairman of the Board of Directors John Elkann is dissatisfied with the situation in North America and has begun the search for a successor to replace Tavares. His contract ends at the beginning of 2026. Tavares turned 66 in August and had already made a name for himself as a “cost killer” as head of the French PSA group.
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