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Stellantis and Aston Martin became the latest European carmakers to issue profit warnings with the industry hammered by competition from cheaper Chinese rivals and weaker demand in its home market.
Shares in Stellantis fell 13 per cent while Aston Martin was down 24 per cent in morning trading on Monday as a string of similar downgrades by Volkswagen, BMW and Mercedes increased concerns about a deeper downturn on the back of slowing growth in electric vehicle sales.
Stellantis forecast its adjusted operating margin for 2024 at 5.5 to 7 per cent, down from previous guidance of 10 per cent. Its free cash flow would be negative, in the range of €5bn to €10bn, it added, from a positive figure previously.
UK luxury-car maker Aston Martin said profits would be lower and that it would no longer be free cash flow-positive in the second half of the year, blaming weaker demand in China and supply chain problems.
“Competitive dynamics have intensified due to both rising industry supply, as well as increased Chinese competition,” Stellantis said.
The announcements come as Germany’s Volkswagen lowered its annual guidance for the second time in three months on Friday, blaming weaker sales on “a challenging market environment”. In recent weeks, Mercedes-Benz and BMW have also issued profit warnings.
Sales of foreign cars have fallen sharply in China because of stiff competition from local rivals while vehicle demand in the world’s largest car market has also been hit by sluggish consumer spending. Meanwhile, Chinese carmakers offering low-cost EVs are making inroads in international markets.
One major challenge for Stellantis, which makes Peugeot, Fiat, Chrysler and Jeep vehicles, has been its high inventories in the US, where it has been offering discounts to try to resolve the issue.
The group said it was now aiming to reduce its US vehicle inventory — which was 430,000 at the end of June — by 100,000 vehicles by early 2025.
Stellantis’s warning marks a sharp reversal in fortune for the world’s fourth-biggest car manufacturer, raising the pressure on chief executive Carlos Tavares at a time when the company is also launching a search for his successor in 2026.
Stellantis was created through a megamerger between Fiat Chrysler and France’s PSA, owner of Peugeot, in 2021. Tavares, who joined PSA in 2014, helped forge the alliance and was known for his focus on seeking higher profit margins through cost cuts.
On Monday, Aston Martin cut its wholesale volume target for this year from 7,000 to 6,000 vehicles, blaming late component deliveries by some of its suppliers.
The lower guidance comes as Adrian Hallmark, who took over as chief executive at the start of September, is aiming for a strong sales revival with a slew of new product launches.
Hallmark said in a call with investors that the reduced vehicle deliveries would protect the company from “lower demand in China . . . and avoid the additional supply chain recovery and logistic costs that would be incurred if we continue to try to deliver such a large volume in vehicles so late in the fourth quarter.”
The London-listed company said that as a result, its adjusted earnings before interest, tax, depreciation and amortisation margin were now likely to be in the high teens, instead of its previously targeted low 20 per cent range.
George Galliers, analyst at Goldman Sachs, said in a note that the impact on next year’s targets was likely to be limited. “However, with Aston Martin still burning cash in second half, we expect questions around liquidity and the status of the balance sheet to remain top of mind,” he added.