A very dark day for the European automotive sector, after a series of profit warnings by some of the sector's giants in recent days. This morning the Italian-French stellantis its English Aston Martin have revised downwards their guidance on 2024 earnings, following the same move on Friday by German Volkswagen, while this month Mercedes-Benz lowered its full-year profit margin target for the second time in two months.
The respective stock market securities are in sharp decline, dragging down the rest of the price lists as well. stellantis, which struggled to gain value during the morning due to the sharp drop, showed a -14% at 12,51 euros at mid-session. Aston Martin Lagonda Global Holdings is down 19,81% at 127,90 pounds on the London stock exchange. Volkswagen AG Pref records a decrease of 2,53% to 94,62 euros, while Porsche Automobil Holding loses 3,79% to 40,90 euros. Also in deep red Renault at 38,73 euros, -6,25%.
Cars, here's why the sector is uncertain
The numbers from individual manufacturers are pieces of a complicated and not very reassuring automotive puzzle. The revisions to the guidance come as theXNUMX-XNUMX business days is finalizing plans for possible tariffs on Chinese electric vehicles, as European manufacturers struggle with plummeting demand and so continue with cuts to the staff e factory closuresMeanwhile, China itself is reinvigorating itself after the significant stimulus packages injected into the economy by the Chinese authorities in the last week.
Cars, the hypothesis of a Stellantis-Renault merger with BMW also returns
In order to try to deal with the current terrible conditions, the project hypothesized last February of putting everything into common use and team up in Europe to cope with the advance of Chinese electric cars (with BYD in the lead): create a mega group that brings together Starring with Renault, but we also talk about a three-way pact with BMW, very strong in the production of high-end electric cars, to create the Airbus of the car. Rumors had already been circulating months ago, with the French showing greater openness to the operation and more skepticism at Stellantis. A merger between Stellantis and Renault would encompass well 18 brands: The world's fourth largest auto group, created by the PSA-Fiat Chrysler alliance, is already considered a giant, and would bring 14 brands, including Fiat, Peugeot, Jeep and Citroën. If Renault were to become part of the new group, it would add 4 more brands.
Elkann and de Meo, different ideas: key meeting on October 15
The main sponsor of the merger between Stellantis and Renault would seem to be French President Emmanuel Macron, since the State is a shareholder of Renault with 15% and of Stellantis with 6,1%. The favorite candidate for the top of the new car giant is the CEO of Renault Luca de Meo, Considered Carlos Tavares, will remain in office until 2026. Luca de Meo has expressed interest in cooperating and creating a “Airbus of the car" European to join forces and overcome the challenges of electrification and Chinese competition, while greater skepticism has emerged from the management stellantis. According to what reported by Reuters, Elkann reportedly stated some time ago: “There is no plan under consideration regarding mergers with other producers.” Furthermore, Tavares he expressed his concern about the homogenization of brands in the event of the creation of a single large automotive group. The risk, in fact, is to flatten the proposals and innovations and to lose competitiveness and attractiveness among consumers. Furthermore, there are fears that a Stellantis-Renault merger could to disadvantage Italy and instead strengthen the French share in the automotive sector. A reorganization of production would be, according to the first assessments of analysts, disadvantageous for the Italian factories already in difficulty.
But things could get clearer with a few more details on the strategies of European car manufacturers in the coming weeks: October 13 will see the start of the Paris Salon, but above all we await the meeting, scheduled for 15 October, between Luca de Meo e Carlos Tavares which should participate Oliver Zipse, ceo of bmw.
Stellantis: Operating Margin and Cash Flow Targets Revised
Stellantis is experiencing one of the darkest periods in its history, albeit short: born only in 2021 from the merger of Fca and Psa. In this complicated picture, the CFO of Stellantis, Natalie Knight, has covered its tracks, cutting its 2024 earnings estimates and confirming the group's difficulty in achieving its guidance adjusted ebit over 10%, calling it an “ambitious” target and therefore also a free cash flow of over 6 billion. Stellantis has therefore communicated two changes to the guidance. The adjusted operating margin is expected to be between 5,5% and 7% for the full year, down from the previous “double-digit” range. About two-thirds of the decline is due to corrective actions in North America, a press release said, while other factors include lower-than-expected second-half sales in several regions. As for the industrial free cash flow is now expected to be in a range between -5 billion euros and -10 billion euros compared to the previous one defined as "positive". Currently the consensus Bloomberg forecasts revenues of 2024 billion for 170, an adjusted operating result of 15,8 billion (9,3% margin) and an industrial free cash flow of 4,8 billion.
The stock of unsold machines
Now the giant confirms that it has several “in stock”and cars not sold, which explains the latest super offers, both in the US and in Europe. On this side of the ocean, the specialized media reports that even the Fiat Panda is struggling, an absolute best seller that could lose – after more than 10 years – the scepter of best-selling car in Italy in favor of the Dacia Sandero. In the US, meanwhile, losses are in double figures: in the first half of the year the collapse was 16%, with Jeep in particular losing 9%, Ram 26%, Chrysler went down 8% and Dodge lost 16%. Not even Alfa Romeo is doing so well, having a mainly European appeal: according to data from CarEdge, the Alfa Romeo Giulia is reportedly the slowest-selling car in the U.S., sitting in inventory for 617 days, more than a year and a half. Meanwhile, Stellantis has also reduced the supply of the Stelvio and Tonale in the U.S.
Aston Martin, Volkswagen: Same Dark Landscape
Aston Martin said it no longer expects to be free cash flow positive in the first half and cut its 2024 wholesale volume target by about 1.000 vehicles to address the issue. Volkswagen forecast a 2024 profit margin of around 5,6%, compared with a previous estimate of 6,5-7%, citing a weaker-than-expected performance from its auto division and a broader deterioration in the macro picture.
