Stellantis sees that things are going from bad to worse

The automaker behind brands like Jeep ( STLA ), Chrysler and Dodge cut its full-year financial expectations on Monday as CEO Carlos Tavares tries to fix the company’s so-called “disaster” in North America.

Stellantis cited market performance issues as well as “deterioration” in the global auto industry, pointing to the growing threat of Chinese automakers and a growing supply of vehicles. Rivals such as BMW, Mercedes-Benz and Volkswagen, as well as luxury carmaker Aston Martin, have all cut guidance in recent weeks, citing similar reasons.

The Netherlands-based automaker has increased its timetable to reduce US dealer inventories to about 330,000 units by the end of 2024, starting in the first quarter of 2025. To do so, it will reduce shipments to America of North in the second half of 2024 to more than 200,000 units compared to a year earlier, doubling its previous guidance.

In addition, Stellantis will offer more generous incentives for vehicles manufactured for the 2024 model year and older, as well as launch “productivity improvement initiatives that include both cost and capacity adjustments.”

Stellantis’ performance in North America has been tough in recent months, plagued by large recalls, stagnant sales, declining profits and quality issues. That’s in addition to several executive departures and bold offers to buy back at least one of the automaker’s brands. Dealers earlier this month wrote to Tavares about the “rapid degradation” of Stellantis brands caused by “short-term decision-making” that hurt market share.

“A disaster not just for us, but for everyone involved — and now that disaster has arrived,” the National Council of Stellantis Dealers of the USA wrote in the Sept. 10 letter.

Stellantis also faces potential walkouts from members of the United Auto Workers (UAW) union, which filed a series of federal labor charges against the automaker earlier this month. The union accused him of breaking promises made in his employment contract and of planning to move production of the Dodge Durango to Ontario from Detroit. Stellantis denied both of the UAW’s allegations.

Stellantis cut its adjusted operating income margin to between 5.5% and 7% for fiscal 2024, down from its previous “double digit” target. Free cash flow forecast has been cut to a range of negative €5 billion to negative €10 billion from Stellantis’ previous “positive” prediction.

“The company will continue to activate and expand its competitive differentiators and believes that the turnaround actions put in place will ensure stronger operational and financial performance in 2025 and beyond,” Stellantis said in a statement.

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