Stellantis Revises 2024 Financial Outlook

Stellantis N.V. announced a revision of its 2024 financial guidance, citing the need to address performance issues in North America and worsening conditions in the global automotive industry. The company is taking decisive steps to resolve these challenges, including significant remediation actions and adjustments to its market strategy.

One of the key changes involves Stellantis accelerating its plan to normalize U.S. inventory levels, aiming to reduce dealer inventories to no more than 330,000 units by the end of 2024. This target was previously scheduled for the first quarter of 2025. As part of this effort, Stellantis will reduce North American shipments by over 200,000 vehicles in the second half of 2024—double the earlier guidance of 100,000. The company also plans to increase incentives on 2024 and older models while improving productivity through cost and capacity adjustments.

Stellantis highlighted that the global market environment has deteriorated, with a downgraded 2024 market forecast and intensifying competition, particularly due to rising global supply and increased pressure from Chinese automakers.

Updated 2024 Financial Guidance

- Adjusted Operating Income (AOI) Margin: The company now expects an AOI margin of 5.5% to 7.0% for the full year 2024, a significant reduction from the previously forecasted "double-digit" margin. About two-thirds of this decline is attributed to the corrective actions being taken in North America, with additional contributions from lower-than-expected sales in most regions during the second half of the year.

- Industrial Free Cash Flow: Stellantis now projects industrial free cash flow to range from -€5 billion to -€10 billion, a stark contrast to the earlier guidance of "positive" cash flow. This change is largely driven by the lower AOI outlook and temporarily increased working capital requirements in the latter half of 2024.

Strategic Response and Future Outlook

Despite the near-term challenges, Stellantis remains committed to leveraging its competitive strengths and anticipates that the recovery actions will drive stronger operational and financial performance in 2025 and beyond. The company continues to focus on improving cost efficiency, optimizing capacity, and adjusting its strategy to navigate the shifting dynamics of the global automotive market.