It has just publicly announced that Stellantis will be revising its financial targets for the current year, which will come to an end in a few months. Under obligation, the company has been forced to implement a change in strategy due to a market that is changing too abruptly. The actions that have been taken to try to readjust the North American market have contributed substantially to this choice. In addition, constantly deteriorating market dynamics have added uncomfortable situations for proper business performance.
Stellantis forced to revise financial targets
The market in North America for the Stellantis Group has been in dire straits for several months. Sales have declined significantly, and the problems for Stellantis are numerous and on every front. starting with criticism of CEO Carlos Tavares, going as far as calls for strike action by the unions, Stellantis is being forced to change the financial targets that were previously set.
Stellantis U.S., target for disposal of stock levels
Also with regard to the United States, Stellantis has decided to try to make the disposal of inventory levels of the various brands much faster. The goal estimated by the group is not to exceed 330,000 vehicles for all dealerships by the end of this year. A target that was initially expected by the end of the first quarter of next year. The group’s actions include a drop in sales in the North American market of more than 200,000 vehicles regarding the second half of this year. Previous forecasts, saw this figure amounting to exactly half, taking the same period of the year 2023 as a reference.
So how can Stellantis handle the situation? First, by trying to sell fewer new cars, in the second half of the year than in the first half. This could contribute positively to reducing inventory, creating space in warehouses for new cars that will come out in 2025. In addition, the company makes discounts on cars that have been produced before, so as to attract more consumer attention. Finally, the company also tries to produce cars more efficiently by adapting production lines to market demands.
Financial redesign in numbers
The 2024 automotive framework had decidedly different forecasts than those that have been presented recently. In fact, its deterioration is taking place in these very weeks, during which Chinese competition and increased supply is also increasing.
Now the financial redefinition of Stellantis involves a certain process. The current operating margin (“AOI”), which was initially projected to be between 5.5 and percent for the current year, has had a significant drop when one considers that the initial idea was in double digits for this figure. Two-thirds of the reduction in this important margin, was attributed to the events that are shaking the North American market negatively. The remainder of the decline, on the other hand, was attributed to the sharp drop in sales occurring in many of the regions where Stellantis works with its brands. Stellantis, seems to have accepted the difficult situation, having implemented numerous corrective actions. The business thinking remains positive for a strong recovery starting early next year.