Stellantis lowers expectations for 2024

The profit margin will be lower than expected. Plans for the US also updated

Photo by: Stellantis

By: Eleonora Lilli

Oct 7, 2024 at 3:30am ET

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This year's profit margin will be lower than expected for Stellantis. The news was in the air, as the 2024 accounts got off to a poor start (mainly due to disappointing results in the US) and competition from China is increasingly fierce. The announcement is now official as the adjusted profit margin is expected to be between 5.5% and 7.0% for the year, down from the previously expected "double-digit" level.

In the same note, the Group provides updates on the actions taken in the US to revive sales and says it is "confident that the recovery actions put in place will result in stronger operational and financial performance in 2025 and beyond".

What Stellantis is doing in the US

In the US, where results for the first half of 2024 were disappointing, the Group has accelerated its plan to normalise stock levels with a target of no more than 330,000 units in stock in the dealer network by the end of the year compared to the previous first quarter 2025 deadline.

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The actions include a reduction in network deliveries of more than 200,000 vehicles in the second half of 2024 (an increase from the 100,000 reduction reflected in the previous guidance) compared to the same period last year, an increase in incentives on 2024 and prior year models, and productivity enhancement initiatives that include adjustments on both cost and capacity.

The new forecast for 2024

The updated guidance and market expectation for 2024 are as follows:

Adjusted Operating Profit Margin: expected between 5.5% and 7.0% for the full year 2024, down from the previous "double digit". About two-thirds of the reduction in the expected Adjusted Operating Profit Margin is related to corrective actions in North America; other factors include lower than expected sales in the second half of the year in several regions.
Industrial Free Cash Flow: expected in the range of EUR -5 billion to EUR -10 billion compared to the previous "Positive". This mainly reflects the lower Adjusted Operating Profit expected as well as the impact of temporarily higher working capital in the second half of 2024.