After the recent revisions, strictly downwards of the forecasts, of other automotive giants such as Volkswagen, Mercedes and BMW, too Stellantis announced a lowering of its estimates for 2024. A change which, numbers in hand, is the result of a series of problems related to performance of the group, particularly in the North American market, as well as the deterioration of certain global dynamics of the automotive sector.
New estimates for the operating margin
Stellantis revised its margin expectations downwards adjusted operating result, now expected between 5.5% and 7%, compared to the previous target of a “double digit”. This reduction is attributed largely, or approximately two-thirds, to corrective measures necessary to address the difficulties experienced in North America. Furthermore, Il Sole 24 Ore points out, the group has reported lower sales compared to expectations in the second half of the year in several regions. But the new forecasts do not stop here: Stellantis also forecasts an industrial free cash flow in a range between -5 billion and -10 billion, a clear change compared to the previous prediction of a positive result. In this case the downward revision was dictated by the lower expected adjusted operating result and the impact of temporarily higher working capital in the second half of 2024.
Corrective actions in North America
In response to these challenges, Stellantis has accelerated its plan to normalize inventory levels in the US, setting a goal of do not exceed 330,000 units in storage to the network by the end of 2024, compared to the initial deadline expected for the first quarter of 2025. The corrective actions include not only a reduction in deliveries to the network of more than 200,000 vehicles in the second half of 2024, but also an increase in incentives on 2024 and previous year models, as well as a series of initiatives to increase productivity, through cost adjustments and on production capacity.
Stellantis revises estimates downwards
The group also highlighted how the deterioration global industry conditions lead to a lower market forecast for 2024 than at the beginning of the year, given that certain competitive dynamics have intensified, clearly influenced by an increasing supply as well as increasing Chinese competition. But despite the current difficulties, Stellantis remains very confident: the Italian-French group intends to continue to leverage its competitive differentiators and believes that the recovery actions undertaken will lead to more robust operational and financial performance in 2025 and beyond.
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