Stellantis reviews forecasts and gets slashed on stock market

Car manufacturing group Stellantis is undoubtedly not the first to lower its expectations, but the stock market’s reaction has been the most brutal. Stellantis shares have fallen by more than 10%.

It seems that shareholders and speculators wanted to punish Stellantis for its impressive successes in the last years now that the car industry, in general, and Stellantis, in particular, is facing challenging times.

Yesterday, the group issued a statement with far lower forecasts for production and sales, resulting in an operational margin of 5.5 to 7%, a far cry from the ‘double digits’ it used to achieve in passing years. The net benefit for the first half of this year has shrunk to €5.6 billion, a 48% decrease compared to last year.

General malaise

Lately, a whole bunch of carmakers have been issuing warnings about their sales and financial results for the coming months/years. Some of them, like Volkswagen, have even threatened with lay-offs, something unheard of in the recent history of a car manufacturing giant like Germany.

Stellantis now joins Mercedes, BMW, Volkswagen, Volvo, Aston Martin, and others and points to the slow sales in Europe since the beginning of the year and the increasing competition, also with Chinese newcomers.

In Italy, Stellantis is confronted with a critical government and the anger of the unions. They have announced a strike beginning on October 18 because of an important slow-down in production and temporary redundancy in the factories.

North America

Also, in the States – until now the cash cow for Stellantis with healthy sales for Jeep, Chrysler, and Ram – sales are slowing down, and competition is worsening. It has provoked a serious battle between the manufacturer and its unions, the latter accusing the carmaker of neglecting the American brands of the group.

Stellantis recently launched several costly operations to boost sales. “Approximately two-thirds of the operational margin’s decrease is due to these North American measures,” Stellantis details. The result is also a free cash flow in the red, while expectations were positive until recently.

Carlos Tavares

Not so long ago, the very outspoken CEO of the Stellantis Group, Carlos Tavares, was the hero of the car industry because of his mastery of turning the PSA and FCA groups into one big company, Stellantis, one of the biggest players in the world.

He became renowned for his commotion-causing interviews and his outspoken views on how the car industry should react to the crisis and the growing Chinese competition. Lately, he even joined the latter, starting to sell Leapmotor products via his Stellantis organization in Europe.

Now, he seems to have lost his halo of unbeatable cost cutter and future-proof manager. The group has already started a succession procedure for its CEO, while Tavares’ mandate runs until the beginning of 2026 when he will have reached retirement age. It’s unlikely that he will get a new mandate, but beginning to search for a successor a year and a half before the current mandate ends is not very honorable for the creator of the Stellantis Group.