Dodge-parent Stellantis tumbles on warning, dragging auto stocks lower

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Dodge-parent Stellantis tumbles on warning, dragging auto stocks lower

Stellantis (STLA) stock tumbled 13% early Monday after the company

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about its North ********* operations, dragging other auto stocks lower in sympathy.

Stellantis — which counts Dodge, Ram trucks, and Jeep in its product portfolio — said it would have to “enlarge remediation actions” it was planning to take due to performance issues in North America, as well as “deterioration” in the global market, in particular China.

“Actions include North ********* shipment declines of more than 200,000 vehicles in the second half of 2024 (up from 100,000 prior guidance), compared to the prior year *******, increased incentives on 2024 and older model year vehicles, and productivity improvement initiatives that encompass both cost and capacity adjustments,” Stellantis said in a statement.

As a result of these strategic changes, Stellantis now sees adjusted operating income (AOI) margin of between 5.5% to 7.0% for the fiscal year 2024, down from prior “double digits,” with two-thirds of this hit coming from actions taken in North America. Industrial free cash flow is now expected to come in at a loss of €5 billion to €10 billion ($5.58 billion – $11.17 billion), a drop from the “positive” figure it had seen prior.

Shares of GM, Ford, and Toyota all slipped on Monday as well.

Deterioration in Stellantis’ North ********* business was no secret, with

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, price cuts expanding, and dealers complaining about company mismanagement.

Meanwhile the ******* Auto Workers (UAW) is considering labor strikes as it believes Stellantis violated its agreements to restart operations with various projects at Stellantis’ shuttered Belvidere, Ill., assembly plant.

Stellantis isn’t the only automaker facing structural and macroeconomic issues. ******* automaking giant Volkswagen is planning to layoff workers in Germany due to overcapacity and downbeat sales, with

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in retaliation.

Meanwhile, Japan’s Nissan

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due to rising inventories, with global sales

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. Nissan’s product mix in the US, where it lacks hybrids, is also hurting its sales performance.

Last week Morgan Stanley’s autos and mobility team, led by analyst Adam Jonas, downgraded the entire US auto sector, citing rising inventories and concerns from China as the main catalysts.

“At a high level, our downgrade is driven by a combination of international, domestic and strategic factors that we believe may not be fully appreciated by investors,” the Morgan Stanley team wrote in the note. “US inventories are on an upward slope with vehicle affordability … still out of reach for many households. Credit losses and delinquencies continue to trend upward for less-than-prime consumers. And China’s 2-decade-long growth engine has not stalled.”

Story continues

Interestingly, Morgan Stanley maintains its Overweight rating on Tesla, citing Tesla’s AI and self-driving prowess. Tesla’s highly anticipated Robotaxi event is slated for next week, on October 10.

Pras Subramanian is a reporter for Yahoo Finance. You can follow him on

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