(Bloomberg) -- Stellantis NV’s earnings plummeted in the first six months of the year, adding to an increasingly bleak outlook for the car industry following a massive drop in sales in the U.S. and Europe for the manufacturer.
The results, which sent the stock down as much as 13 per cent, follow disappointing reports this week from Ford Motor Co. and Tesla Inc. that also sent their shares tumbling. Even Renault SA, which posted better than expected earnings, saw its shares drop almost 10 per cent as broader investor sentiment soured.
Carmakers are contending with weakening demand, especially for electric cars, and facing intensifying competition in Asia and Europe from Chinese manufacturers. For Stellantis, the problems were most acute in the U.S., where the company has seen high inventory levels, a string of executive departures and quality issues weigh on profit.
With shipments in North America falling 18 per cent, Stellantis has decided to bring back some models it had pulled from the U.S. market, including the Dodge Charger, to win some clients back, Chief Financial Officer Natalie Knight said on a call with reporters.
The carmaker is also likely to cut prices, especially as they introduce new products, Knight added. North America “is the market that needs the most work and where we are most concentrated.”
The results add pressure to Chief Executive Officer Carlos Tavares, the highest paid CEO among traditional carmakers, to reverse a decline in market share in several countries. He has already extensively cut costs, with €500 million more in savings slated for the second half of the year. Some analysts have started flagging the limits of his strategy.
Among the problems was Stellantis’ Maserati brand, with shipments dropping by more than half to 6,500 units in the first six months of the year. Knight suggested the company may reconsider what would be “the best home” for the brand, even though for now the group remains focused on driving improvements there.
Overall, Stellantis’ net income fell 48 per cent to €5.6 billion (US$6.1 billion) in the first half, missing the €7 billion average estimate in a Bloomberg survey of analysts.
The results could revive criticism from shareholders and advisory groups that opposed Tavares’ US$40 million pay package for last year, a 60 per cent increase from 2022 levels that lifted his compensation above his mass-market industry peers.
Margins declined most significantly in North America, Stellantis’ key region for profits, amid an unfavorable model lineup and pressure on prices, the company said.
The carmaker is taking “corrective actions” to address the problems, Tavares said. Stellantis reiterated it’s launching 20 new vehicles this year to help boost momentum. The company also plans to further lower labor costs and expects 25 per cent reduction in logistics expenses in the second part of the year, according to Knight.
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