Stellantis issued a profit warning on Monday, becoming the second major automaker in four days to revise its financial outlook downward. The global car industry faces increased pressure from rising competition, particularly from China, causing Stellantis to lower its full-year forecast.
Automotive giant experienced a sharp decline in its share price, dropping by around 15% in European trading. Similar declines were anticipated in the U.S. market after the announcement. Stellantis indicated that it will fall short of achieving a double-digit underlying operating profit margin and positive net cash flow in its core manufacturing business this year.
“Competitive dynamics have intensified due to both rising industry supply, as well as increased Chinese competition,” Stellantis said in a statement. The company now expects its profit margin to be between 5.5% and 7.0%, impacted by the need to clear excess inventory in the U.S. through rebates and incentives. Stellantis has expedited its plan to reduce inventories, aiming to limit stock at dealerships to 330,000 vehicles by the end of this year, instead of the original target set for the first quarter of 2025.
Additionally, Stellantis’ industrial operations are expected to lose between €5 billion and €10 billion ($5.6-$11.2 billion) this year. This is a major reversal from its previous forecast in late July, which projected positive cash flow. Following the news, UBS placed its ‘buy’ rating for Stellantis under review, highlighting the seriousness of the situation compared to other carmakers like those in Germany.
Stellantis’ warning follows a similar announcement from Volkswagen Group just last Friday, marking the second profit warning in the auto industry within a few days. The pressure is mounting on Stellantis’ CEO Carlos Tavares, who is now fighting to retain his position. Earlier this month, U.S. dealers criticized Tavares for the high inventory levels, and the board has reportedly begun exploring potential successors for when his contract expires in early 2026.
Tavares, once hailed for his role in transforming Peugeot Citroen into a global powerhouse, now finds himself navigating a challenging period. The broader industry is also feeling the strain—Volkswagen’s CEO is facing pressure over his dual role leading both the group and Porsche.
The shifting dynamics in China are largely responsible for these challenges. Once an attractive growth market for Western automakers, China has now become a significant competitive threat. Western brands, including Tesla, are being forced to offer substantial discounts to maintain their market positions despite high pressure from emerging Chinese manufacturers like BYD and Geely, who are also expanding into international markets.
TRENDING | Hyundai Celebrates 100 Million Vehicles Produced Globally with Ioniq 5 Milestone
