Stellantis Shares Plunge as Profit Slumps and Inventory Challenges Persist

Stellantis (STLA) shares are plunging 8% in premarket trading Wednesday after the automaker reported results that lagged both analysts’ and its own expectations as the automaker struggles with excess inventory in North America.

The owner of the Chrysler and Jeep brands said it is taking “decisive actions to address operational challenges” and reported a 48% year-over-year slump in first-half net profit to 5.65 billion euros ($6.13 billion), and a 14% decline in revenue to EUR85.02 billion.

Those operational challenges include its “North American share and inventory performance,” the company said. Restructuring and foreign exchange costs added to the downbeat numbers, it said.

“The Company’s performance in the first half of 2024 fell short of our expectations, reflecting both a challenging industry context as well as our own operational issues,” Stellantis Chief Executive Officer (CEO) Carlos Tavares said.

Automakers Face Challenging Times

Stellantis’ weak results come at a challenging time for automakers, which are coping with cooling demand as inflation bites spending and falling demand for electric vehicles.

On Wednesday, Ford Motor (F) reported second-quarter earnings that also fell short of expectations and kept its full-year guidance unchanged, in contrast to rival General Motors (GM), which raised its outlook a day earlier and recorded an earnings beat, although its China losses took investors by surprise.

On Tuesday, Tesla (TSLA) posted a disappointing 45% year-over-year decline in profits, dragged by lower average selling prices.

Stellantis shares were down about 16% this year through Wednesday’s close.

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Conclusion

Stellantis, the owner of the Chrysler and Jeep brands, is facing significant challenges as it reported a 48% year-over-year slump in first-half net profit and a 14% decline in revenue. The company is struggling with excess inventory in North America and is taking decisive actions to address operational challenges. These challenges, along with restructuring and foreign exchange costs, have contributed to the disappointing results. The weak performance of Stellantis comes at a difficult time for the automotive industry, with automakers dealing with cooling demand, inflation, and falling demand for electric vehicles. Other major automakers, such as Ford and Tesla, have also reported earnings that fell short of expectations. Stellantis shares have experienced a significant decline this year. As the industry continues to navigate these challenges, it will be crucial for automakers to adapt and find strategies to overcome the obstacles they are facing.