European carmakers warn on profits in the face of weak demand and rising costs
European carmakers struggle with weak U.S., China demand
Potential tariff war adds to sector's concerns
Stellantis shares drop nearly 11%
Aston Martin shares plunge 20% after profit warning
Updates stock action in paragraphs 4 and 5, analyst comments on Stellantis' U.S. approach in paragraphs 15 and 16
By Nick Carey
LONDON, Sept 30 (Reuters) -European carmaker Stellantis STLAM.MI on Monday joined bigger rival Volkswagen VOWG_p.DE and others in warning about the worsening outlook for auto demand and rising costs, wiping billions of euros off the sector's market value.
The companies are struggling with weak demand in China and the United States and a potential trade war between Beijing and the European Union as the EU prepares to finalise import tariffs on Chinese electric vehicles, imposed over alleged subsidies.
British luxury carmaker Aston Martin AML.L also partly blamed falling demand in China for a full-year profit warning on Monday, as did Mercedes-Benz MBGn.DE and BMW BMWG.DE earlier this month.
Aston Martin's shares plunged as much as 28% to their lowest in nearly two years.
Shares in Stellantis, long popular with investors but now seen as acting too slowly to address problems in the U.S. market, fell nearly 15% and hit their lowest since December 2022. Stellantis shares have lost 38% in value this year, making it Europe's worst performing automaker.
The latest warnings follow Volkswagen's announcement late on Friday that it was cutting its 2024 profit outlook for the second time in under three months. Its shares were down a little over 2.8% in mid-morning trading on Monday.
The German car giants have been reliant on China for around a third of their sales and have been hit by the weaker economy there, fiercer competition from domestic Chinese automakers and a vicious price war in the electric vehicles (EV) market.
"MANAGEMENT'S CONSPICUOUS ABSENCE"
Falling European demand has not helped. New car sales in the EU fell 18.3% in August to their lowest in three years with double-digit losses in major markets Germany, France and Italy and sliding EV sales.
But many of Stellantis' problems stem from North America.
The expensive Jeeps and pickup trucks it sells in the U.S. market have generated virtually all its profits since the automaker was formed by the 2021 merger of FCA and PSA, and have made its profit margins the envy of its mainstream peers.
But high inventories and weak sales as Stellantis has somehow misjudged its cash cow market has forced it to cut production while also offering deep discounts on the vehicles depreciating on dealer lots across America.
As a consequence Stellantis has slashed its adjusted profit margin for the year to between 5.5% and 7%, down from double digits, and warned of negative cash flow of between 5 billion euros ($5.6 billion) and 10 billion euros.
In a client note after Stellantis' investor relations team held a conference call with investors, Bernstein analysts wrote that the company had been slow to address concerns over the size of its U.S. inventories.
"Today's cut ... signals a drastic about-face," they wrote. That lack of speed, "management's conspicuous absence during today's call" and concerns over pricing discipline "will require a significant effort to rebuild trust going forward."
Forward 12-month price-earnings ratios, a measure of a company's market value, for the three biggest European carmakers - VW, Stellantis and Renault RENA.PA - are around 3, much lower than U.S. rivals, GM GM.N and Ford F.N, and the world's largest carmaker, Toyota 7203.T.
Where traditional European automakers' problems intersect is rising competition from Chinese rivals who can develop better, cheaper EVs faster than Volkswagen, Stellantis or Renault can.
They are also struggling to sell the EVs they are making, while investing large sums to develop new, more affordable models.
Changing over production lines to new models takes revenue-generating capacity offline, exacerbating cash flow issues for legacy automakers whose plants already have capacity utilization problems that they have failed to address.
Falling market share in China and lower car demand in Europe have led Volkswagen to warn of possible plant closures in Germany, putting the company on a collision course with the powerful IG Metall union.
Talks over pay between Volkswagen and the union started last week.
($1 = 0.8948 euros)
Reporting By Nick Carey; Editing by Emelia Sithole-Matarise and Catherine Evans
Mga Kaugnay na Asset
Pinakabagong Balita
Disclaimer: Ang mga kabilang sa XM Group ay nagbibigay lang ng serbisyo sa pagpapatupad at pag-access sa aming Online Trading Facility, kung saan pinapahintulutan nito ang pagtingin at/o paggamit sa nilalaman na makikita sa website o sa pamamagitan nito, at walang layuning palitan o palawigin ito, at hindi din ito papalitan o papalawigin. Ang naturang pag-access at paggamit ay palaging alinsunod sa: (i) Mga Tuntunin at Kundisyon; (ii) Mga Babala sa Risk; at (iii) Kabuuang Disclaimer. Kaya naman ang naturang nilalaman ay ituturing na pangkalahatang impormasyon lamang. Mangyaring isaalang-alang na ang mga nilalaman ng aming Online Trading Facility ay hindi paglikom, o alok, para magsagawa ng anumang transaksyon sa mga pinansyal na market. Ang pag-trade sa alinmang pinansyal na market ay nagtataglay ng mataas na lebel ng risk sa iyong kapital.
Lahat ng materyales na nakalathala sa aming Online Trading Facility ay nakalaan para sa layuning edukasyonal/pang-impormasyon lamang at hindi naglalaman – at hindi dapat ituring bilang naglalaman – ng payo at rekomendasyon na pangpinansyal, tungkol sa buwis sa pag-i-invest, o pang-trade, o tala ng aming presyo sa pag-trade, o alok para sa, o paglikom ng, transaksyon sa alinmang pinansyal na instrument o hindi ginustong pinansyal na promosyon.
Sa anumang nilalaman na galing sa ikatlong partido, pati na ang mga nilalaman na inihanda ng XM, ang mga naturang opinyon, balita, pananaliksik, pag-analisa, presyo, ibang impormasyon o link sa ibang mga site na makikita sa website na ito ay ibibigay tulad ng nandoon, bilang pangkalahatang komentaryo sa market at hindi ito nagtataglay ng payo sa pag-i-invest. Kung ang alinmang nilalaman nito ay itinuring bilang pananaliksik sa pag-i-invest, kailangan mong isaalang-alang at tanggapin na hindi ito inilaan at inihanda alinsunod sa mga legal na pangangailangan na idinisenyo para maisulong ang pagsasarili ng pananaliksik sa pag-i-invest, at dahil dito ituturing ito na komunikasyon sa marketing sa ilalim ng mga kaugnay na batas at regulasyon. Mangyaring siguruhin na nabasa at naintindihan mo ang aming Notipikasyon sa Hindi Independyenteng Pananaliksik sa Pag-i-invest at Babala sa Risk na may kinalaman sa impormasyong nakalagay sa itaas, na maa-access dito.
