The owner of Vauxhall, Fiat and Peugeot has issued a profit warning, blaming a hit to sales from a deterioration in the global automotive market and increased competition from Chinese rivals.
Stellantis shares plunged by 14% on Monday after it said it expected profit margins to be between 5.5% and 7% for the year, down from the previous forecast of double-digit growth.
The British luxury car manufacturer Aston Martin also issued a profit warning on Monday, blaming the softening Chinese market as well as widespread supply chain issues for the drop.
Almost $10bn (£7.5bn) was wiped off European auto stocks on Monday after the two profit warnings and one from Volkswagen on Friday, amid growing fears over weakening car sales. The Stoxx Auto and Parts index, which analyses the share prices of Europe’s largest car and parts manufacturers, recorded a 4% drop on Monday.
The rival carmakers BMW and Mercedes have also said in the past month that they would face lower profits this year, citing weaker demand.
In its update, Stellantis said: “Deterioration in the global industry backdrop reflects a lower 2024 market forecast than at the beginning of the period, while competitive dynamics have intensified due to both rising industry supply, as well as increased Chinese competition.”
It said its expected fall in profit was partly down to lower-than-expected sales performance in the second half of the year across most regions. It was also driven by increased costs linked to an overhaul at its US business, which includes the Chrysler and Dodge brands, to address the oversupply of vehicles in the US.
The carmaker said it was looking to cut the supply of cars to the US by 200,000 this year, in an attempt to “normalise its inventory” by keeping the number of vehicles available at dealers in the US at 330,000. It would also use increased incentives to buyers to help clear old stock.
The company is now projecting negative industrial cashflow ranging from -$5bn to -$10bn, compared with previous guidance that had expected positive cashflow.
Stellantis is the latest European carmaker to cut its profit forecast as slowing growth in electrical vehicle sales translates into weaker global demand for new vehicles.
Earlier this month, it announced it would be halting production of its electric Fiat 500s for four weeks because of a lack of orders in Europe.
The market share of European and US producers has also been cut as Chinese producers, which offer cheaper EVs, provide tough competition.
Separately, Aston Martin revealed on Monday that it expected to return lower profits this year because of widespread production issues and falling demand in China.
The luxury carmaker said it needed to make “decisive action” to adjust production because of a growing number of components arriving late, with the company confirming it would produce 1,000 fewer cars this year. Shares in the company, which was founded in 1913, fell by 17% in early trading.
The warning comes a month after the former Bentley boss Adrian Hallmark became its fourth chief executive in four years. Aston said components were arriving late because of disruption at several of its suppliers, which meant it was taking longer to complete vehicles.
Hallmark said: “Over the past six to nine months, blue-chip suppliers have had fires, floods or administrators appointed … at a scale that I personally haven’t seen in my career, and it’s not just Aston Martin that suffered this.”
The business also said “macroeconomic issues” in China were leading to falling sales in the country, which had contributed to the fall in profit.
