Stellantis reported its net revenue dropped 27% compared to third-quarter results from a year ago. The company pointed to lower sales and an “unfavorable mix” and the primary reasons for the decline.
Stellantis laid off 1,100 workers at its Warren Truck Assembly Plant, just north of Detroit. The number is lower than expected due to ongoing Jeep Wagoneer production.
The company took in $35.9 billion or €33 billion during the quarter. Vehicle shipments were down about 279,000 units to 1.15 million, about a 20% fall. Officials attributed part of the slide to production gaps as the company transitioned to new model year vehicles. They also cited planned inventory cuts in North America and “headwinds” from a “challenging” European market.
“While Q3 2024 performance is below our potential, I’m pleased with our progress addressing operational issues, in particular U.S. inventories, which have been reduced meaningfully and are on track for year-end targets, as well as stabilization of U.S. market share,” said CFO Doug Ostermann, in a statement.
“In Europe, stringent quality requirements delayed the start of certain high-volume products, but with progress resolving challenges we will soon benefit from the significantly expanded reach our generational new product wave brings to 2025 and beyond.”
Product blitz
Stellantis officials contend the company is not reneging on its investment commitments.
The company looks to move things upward with an influx of 20 new vehicles in 2024. This next-generation product blitz features the initial offerings from the STLA platform family imbued with superior multi-energy flexibility (hybrid, all-electric, and gasoline powertrains).
That’s already started in Europe with the Alfa Romeo Junior and two new offerings from Citroën, the C3 — including an all-electric model — as well as the Basalt. The SUV’s already debuted in India and is now expanding into other countries.
“The upcoming wave of American product launches kicks off soon with the all-electric Dodge Charger Daytona, the all-electric Jeep Wagoneer S, the all-new, all-electric Ram 1500 REV; and the Ram 1500 Ramcharger range-extended EV pickup,” the company noted.
No changes
Despite facing a tougher-than-expected European market and accelerating its plans to normalize inventory levels in the U.S., the company is sticking to its full-year guidance, which was updated last month.
UAW President Shawn Fain is working to implement hard-line tactics in the union’s dispute with Stellantis.
Adjusted operating income margin is expected to be between 5.5% and 7% for the FY 2024 period, down from prior “double digit” expectations. Roughly two-thirds of the reduced AOI margin is driven by corrective actions in North America. Other contributors include lower than expected sales performance in the second half of the year across most regions.
Industrial free cash flow should range from €5 billion to €10 billion in the red, from the prior “positive” expectation. This primarily reflects the substantially lower AOI outlook as well as the impact of temporarily elevated working capital in the second half of 2024.
The company’s €3 billion buyback program was completed in October (Including €0.9B in Q3), returning a total of €7.7 billion to shareholders in 2024. Consistent capital policy will support early 2025 dividend calibration and buybacks.
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Union problems
The Belvidere Assembly Plant was closed earlier last year. The UAW’s current contract calls on Stellantis to reopen the factory.
The company’s issues in North America — beyond products — remain tied to the United Auto Workers union’s plans to get the automaker to honor certain parts of the labor agreement the two sides forged last year.
Stellantis officials claim they aren’t violating any parts of the agreement while UAW President Shawn Fain disagrees and is rallying the membership to approve a strike of the automaker to get what they want.
However, Fain ran into a bit of a setback this week as his home plant in Kokomo, Indiana declined to authorize a strike against Stellantis. As a result, Local 1166 withdrew a grievance it had filed over Stellantis’ plans to delay investment in a new auto-parts hub and assembly plant in Illinois, Automotive News reported.
For the past few months, Stellantis and the UAW have been fighting the company’s investment plans. The union is threatening to walk off over delayed investments in last fall’s contract, notably plans to reopen a shuttered plant in Belvidere, Illinois.
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