Stellantis Joins Europe's Auto Giants in Sounding Profit Alarms

Zacks10-01

Stellantis N.V. STLA, the multinational automaker born out of the 2021 merger of PSA Peugeot and Fiat Chrysler, has become the latest European car manufacturer after Volkswagen VWAGY, Mercedez Benz ...

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STLA, the multinational automaker born out of the 2021 merger of PSA Peugeot and Fiat Chrysler, has become the latest European car manufacturer after Volkswagen VWAGY, Mercedez Benz ...</p>\n\n<a href=\"https://finance.yahoo.com/news/stellantis-joins-europes-auto-giants-140600863.html\">Source Link</a>\n\n</div>\n","source":"yahoofinance","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Stellantis Joins Europe's Auto Giants in Sounding Profit Alarms</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nStellantis Joins Europe's Auto Giants in Sounding Profit Alarms\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-10-01 22:06 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/stellantis-joins-europes-auto-giants-140600863.html><strong>Zacks</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Stellantis N.V. STLA, the multinational automaker born out of the 2021 merger of PSA Peugeot and Fiat Chrysler, has become the latest European car manufacturer after Volkswagen VWAGY, Mercedez Benz ...</p>\n\n<a href=\"https://finance.yahoo.com/news/stellantis-joins-europes-auto-giants-140600863.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"STLA","symbol_name":"Stellantis NV","start_time":0,"source_url":"https://finance.yahoo.com/news/stellantis-joins-europes-auto-giants-140600863.html","article_id":"2472303793","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/IxLRKAyAt0IYTVtNIODxHg--~B/aD00MDA7dz02MzU7YXBwaWQ9eXRhY2h5b24-/https://media.zenfs.com/en/zacks.com/6b4a2d45ea862a91fc3cc34b4f77b559"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2472303793","pubTimestamp":1727791560,"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"Stellantis N.V. STLA, the multinational automaker born out of the 2021 merger of PSA Peugeot and Fiat Chrysler, has become the latest European car manufacturer after Volkswagen VWAGY, Mercedez Benz Group AG MBGAF and BMW AG BMWYY to cut its profit outlook amid an increasingly challenging market.Stellantis has cited rising costs to turn around its U.S. business, stiff competition from Chinese rivals and sluggish global demand, particularly in China, one of the world’s largest auto markets, as the key reasons for the trimmed guidance. Following the bleak forecast, STLA stock dropped around 13% yesterday, sinking to a 52-week low. The stark profit warning also dragged down the share prices of U.S. legacy automakers General Motors and Ford, which contracted around 3.5% and 2%, respectively.","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"STLA":"Stellantis NV","MBGAF":"Mercedes Benz Group AG","VWAGY":"大众汽车ADR","BMWYY":"宝马汽车","BK4585":"ETF&股票定投概念","BK4534":"瑞士信贷持仓","BK4588":"碎股","BK4099":"汽车制造商","LU1064927863.SGD":"JPMorgan Funds - Europe Dynamic A (acc) SGD-H"},"translate_title":"Stellantis与欧洲汽车巨头一起敲响利润警报","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"BMWYY":1,"MBGAF":1,"STLA":1,"VWAGY":1},"content_text":"Stellantis N.V. STLA, the multinational automaker born out of the 2021 merger of PSA Peugeot and Fiat Chrysler, has become the latest European car manufacturer after Volkswagen VWAGY, Mercedez Benz Group AG MBGAF and BMW AG BMWYY to cut its profit outlook amid an increasingly challenging market.\nStellantis has cited rising costs to turn around its U.S. business, stiff competition from Chinese rivals and sluggish global demand, particularly in China, one of the world’s largest auto markets, as the key reasons for the trimmed guidance. Following the bleak forecast, STLA stock dropped around 13% yesterday, sinking to a 52-week low. The stark profit warning also dragged down the share prices of U.S. legacy automakers General Motors and Ford, which contracted around 3.5% and 2%, respectively.\nSTLA Takes a Sharp Hit\nStellantis lowered its 2024 operating profit margin target in the band of 5.5-7%, down from the previously anticipated double-digit figure. The automaker also warned that it would end the year with a negative cash flow of €5 billion to €10 billion, a stark contrast to the positive numbers initially forecast.\nFor Stellantis, the challenges are compounded by internal struggles, including the search for a new CEO to replace Carlos Tavares, who is under fire for the company’s poor performance. The company had reported a 48% drop in first-half net profits and a 16% decline in U.S. sales, even as the broader market in the region grew.\nThe carmaker’s financial woes come on the heels of an effort to overhaul its North American operations, where shipments are expected to be down by 200,000 vehicles in the second half of 2024 compared to the same period last year. Stellantis plans to bring down dealer inventories to no more than 300,000 vehicles by the end of the year—three months earlier than planned—and is offering larger incentives on 2024 and older models to boost sales. Nonetheless, the recovery for the automaker is not in sight anytime soon.\nSTLA stock has tumbled around 40% so far this year, making it the worst-performing European auto stock.\nYTD Price Performance Comparison\nImage Source: Zacks Investment Research\nIndustry-Wide Struggles Amid Low Demand & EV Competition\nMajor German automakers, Volkswagen, BMW, and Mercedes-Benz, have issued profit warnings in recent weeks, underscoring the broad challenges facing Europe’s auto industry.\nOne of the most significant factors behind these warnings is weakening demand in China, a market that has long been a key driver of profits for European carmakers. The German auto giants have been dependent on China for around one-third of their sales. China’s slowing economy, exacerbated by a real estate crisis and declining consumer confidence, has taken a toll on European automakers. The worries have been compounded by the looming threat of a trade war between Beijing and the European Union as the EU moves closer to implementing tariffs on Chinese electric vehicles (EVs).\nA key area of struggle for these automakers is the rapid rise of Chinese competitors in the EV market. European carmakers have been slow to transition to electric vehicles compared to their Chinese counterparts, who have been able to produce more affordable and technically advanced EVs at a quicker pace. This has led to a vicious price war, particularly in China, where domestic automakers are gaining market share at the expense of European brands.\nIn addition to the price competition, the cost of transitioning to EV production is putting immense financial strain on these legacy automakers. The need to develop new, more affordable models has taken significant resources, and switching production lines from traditional internal combustion engines to EVs has temporarily reduced revenue-generating capacity. As a result, companies are facing cash flow issues.\nFalling demand in the home market is making matters worse. New car sales in Europe declined 18.3% in August, marking the lowest level in three years, with significant declines in key markets such as Germany, France and Italy, along with weakening EV sales.\nA Look at VWAGY, BMWYY & MBGAF’s Trimmed 2024 View\nTwo days back, Volkswagen revised its outlook for the second time this year. The company now expects group sales revenues to decrease by 1% instead of the previously forecast 5% growth. The company also warned of potential job cuts and plant closures as it contends with rising competition from Chinese automakers, who are developing less costly EVs at a faster rate. VWAGY’s global deliveries are also expected to drop to around 9 million units this year, compared to 9.24 million in 2023 as against a 3% year-over-year increase forecast earlier. The company envisions operating margins of around 5.6% now, down from the prior view of 6.5% to 7%. Net cash flow in the automotive division is estimated at around €2 billion ($2.2 billion), down from €4.5 billion forecast previously.\nBMW has likewise been hit hard by weakening demand in China and is grappling with an expensive recall due to a faulty braking system supplied by Continental AG. The recall, which affects 1.5 million vehicles, is expected to cost the company a high three-digit million amount in warranty expenses in the third quarter of 2024. BMW’s revised earnings outlook now predicts an EBIT margin between 6% and 7%, down from the 8% to 10% initially expected for 2024. The Germany-based giant now expects full-year deliveries to decrease in 2024 compared to the prior guidance of increased deliveries.\nLast month, Mercedes-Benz cut its profit margin target for the second time in two months, citing weak sales in China, particularly for high-end models like the S-Class and Maybach sedans. The company now expects adjusted returns between 7.5% and 8.5%, down from the previous forecast of up to 11%. EBIT is expected to fall significantly below last year’s €19.7 billion ($22 billion) compared with a forecast for a nominal drop previously. Additionally, free cash flow for the industrial business is projected to be much lower than last year's levels.\nWrapping Up\nThe profit warnings from Stellantis and its European peers paint a bleak picture of the current state of the European automotive industry. Facing declining demand in key markets like China, rising competition from more agile EV manufacturers, and the high costs of transitioning to electric vehicles, Europe’s carmakers are in for a tough ride. The automakers must figure out ways to stay competitive in this dynamic market, whether that’s through cost-cutting measures, faster EV production or new strategic alliances.\nWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report\nVolkswagen AG Unsponsored ADR (VWAGY) : Free Stock Analysis Report\nStellantis N.V. (STLA) : Free Stock Analysis Report\nBayerische Motoren Werke AG Sponsored ADR (BMWYY) : Free Stock Analysis Report\nMercedes-Benz Group AG (MBGAF) : Free Stock Analysis Report\nTo read this article on Zacks.com click here.\nZacks Investment Research","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2472303793"}