Italian car giant Stellantis sees sales in US crash by one fifth

Stellantis extended its quarterly delivery decline in the US, with car sales falling 20% year-on-year. The company is committed to reducing inventory levels, which it views as the primary challenge.

Stellantis delivered 305,294 vehicles in the third quarter, a sharp 19.8% drop from the same period last year, marking its fifth consecutive quarterly sales decline in the US.

The automaker is expected to report a 21% overall revenue decrease over the past three months, according to automotive industry researcher Cox.

The quarterly sales report followed a guidance downgrade earlier in the week, when the French-Italian carmaker revised its full-year outlook for 2024.

Stellantis attributed the downgrade to decisions aimed at significantly addressing North American performance issues, as well as worsening global industry conditions.

Stellantis, which owns well-known brands such as Jeep, Ram, Chrysler, Dodge, Alfa Romeo, and Fiat, saw sales declines across five of its six key brands in the third quarter.

Compared to the same period last year, sales of Jeep, Ram, Chrysler, Dodge, and Alfa Romeo fell by 6%, 19%, 47%, 43%, and 29%, respectively.

Fiat was the only brand to see a slight increase, with 316 vehicles sold in the US.

High inventory levels

A lack of incentives, high vehicle prices, weakened demand, and intensifying competition have contributed to the rise in Stellantis’ inventory levels.

According to a Cox report from May, some of the company’s best-selling brands, such as Dodge and Jeep, now have inventory levels of 149 and 122 days, nearly double the industry average of 76 days.

Matt Thompson, Stellantis’ Head of US Retail Sales, said in a press release: “At the beginning of Q3, we introduced an aggressive incentive programme across our US brand portfolio. This, combined with significant competitive updates made in August and September, resulted in a reduction of dealer inventory by over 50,000 units by the end of the quarter, a decrease of 11.6%.”

He added, “These cross-brand incentives, which will continue through the end of the year, also helped to deliver consecutive monthly total share growth in Q3, from 7.2% in July to 8% in September.

“We continue to take the necessary actions to drive sales and prepare our dealer network and consumers for the arrival of the 2025 models.”

Cost reduction and guidance downgrade

Amid the ongoing sales decline and production challenges, Stellantis has been cutting costs by reducing its workforce in the US and Europe.

Speaking at the company’s North American headquarters, CEO Carlos Tavares revealed that the company has achieved €8.4bn in cost savings since the merger of Fiat Chrysler and PSA Groupe in 2021.

The company has set a strategic plan to increase revenue to €300bn by 2030. However, Stellantis has significantly lowered its operating income margin target for the full year of 2024 to between 5.5% and 7.0%, down from previously forecast double-digit growth.

It has also reduced its outlook for industrial free cash flow, now projecting a range between – €5bn and – €10bn, compared to the prior estimate of “positive.”

Stellantis shares fall to a near two-year low

Stellantis shares, which reached an all-time high of over €27 in March, have since plummeted 90%, closing at €12.41 on Wednesday, their lowest point since October 2022. Stellantis is now among the top 10 worst performers in the Euro Stoxx 600 Index, with shares down 41% this year.

In the first half of 2024, the automaker reported net revenue of €85 bn, down 14% year-on-year, and a net profit of €5.6bn, a 48% decline compared to the previous year. Stellantis is set to release its third-quarter shipments and revenue figures on 31 October, a key event likely to influence the company’s future stock performance.