Stellantis and CNH Industrial, the two automotive giants controlled by Exor, are facing a storm-filled period. The first period of 2024 ended with disappointing financial results with a further slump in the stock market resulting in a total loss of as much as 17 billion euros.
Stellantis and CNH Industrial: billion-dollar losses and stock market slump
Both companies marked significant declines in their sales and profits compared to the same months in 2023. Stellantis saw sales fall 10 percent, while profits fell even more substantially, reaching 12 percent lower. CNH Industrial did not fare any better either, with a worrisome 17.2 percent decline in profits that equaled $402 million and a 10 percent drop in revenues.
Several challenges and circumstances are straining the performance of the two automotive groups. First, the global auto market is going through a time of delicate weakness, with particularly pronounced declines recorded in South America and Europe. Added to this are the now well-known supply problems affecting the entire industry, from semiconductor shortages to shortages of other key components. These factors have slowed production abruptly and consequently driven up costs,eating into profit margins. Rising prices of raw materials -such as oil, gas and metals -are also not helping, negatively affecting corporate balance sheets.
CEO confidence versus negative market reaction: challenges and hopes for Stellantis and CNH Industrial
Despite the heightened difficulties of the moment, both Carlos Tavares at the helm of Stellantis and Scott Wine at the helm of CNH Industrial remain steadfast and confident about the future. Tavares has unveiled a strategic investment plan to try to accelerate the shift toward electric vehicles and the strengthening of the software business. Both aspects are seen as key elements for long-term competitiveness. Wine, on the other hand, emphasized CNH Industrial’s commitment to improving production efficiency and minimizing costs, while trying to optimize processes to overcome current critical issues.
Nevertheless, the confidence reposed by the CEOs was not immediately reflected positively in the financial markets. Investors obviously reacted negatively to the disappointing quarterly financial statements, causing a substantial drop in the stock value of both companies. Stellantis has slumped 19.2 percent on the stock market in the past month, with a capitalization loss of as much as 16 billion 790 million euros. Even heavier was the decline of CNH Industrial, which lost 10 percent of its value, translating into a loss of more than 1.6 billion euros.
Q2 2024 will certainly be crucial to understand whether the strategies deployed by Stellantis and CNH Industrial will succeed in reversing the course taken. The effectiveness of the investment plans devised and the ability to overcome market and supply challenges will be crucial to restore confidence among investors. This is the only way to get the two groups back on the path to growth. While the future for these two automotive giants remains quite uncertain, one thing is sure: they will have to navigate very wisely through some pretty rough waters to return to shine as they have always done.