(MENAFN- Jordan Times)
PARIS - Shares in Jeep-maker Stellantis and Britain's Aston Martin tumbled on Monday after both companies joined European rivals in cutting their profit forecasts.
European auto giant Stellantis, whose other top brands include Peugeot, RAM and Fiat, cited efforts to improve its US business as well as competition from Chinese automakers.
The company, which also makes Maserati, Dodge and Chrysler cars, said it now expects an adjusted operating income margin ranging between 5.5 and 7.0 per cent.
It had previously expected double-digit growth.
Stellantis shares sank by almost 13 per cent to 12.74 euros ($14.26) in late morning deals on the Paris stock exchange.
"While this is a highly anticipated profit warning ..., the magnitude surprises," UBS bank analysts said in a note.
In a statement, the company said efforts to improve its business in North America accounted for about two thirds of the revision of its financial guidance for the year.
Stellantis said it brought forward to the end of this year plans to reduce its dealer inventory levels to 330,000 units in the United States.
Stellantis offered promotional deals as US dealerships have struggled to reduce their inventories.
The company, which previously expected a positive cash flow, also said it now forecasts negative cash flow ranging between five billion and 10 billion euros.
"Deterioration in the global industry backdrop reflects a lower 2024 market forecast than at the beginning of the period, while competitive dynamics have intensified due to both rising industry supply, as well as increased Chinese competition," it said.
European car companies have struggled to keep up with competition from Chinese electric vehicles.
German auto giants Volkswagen, Mercedes and BMW have also cut their guidance in recent weeks, all partly due to weakness in China.
China effect
Aston Martin also cited the Chinese market as it trimmed its financial guidance for 2024, saying its core profit is now expected to be "slightly below" the previous year's.
The company's shares were down more than 20 per cent to 1.27 pounds ($1.70) in late morning deals in London.
Aston Martin, famous for being James Bond's favourite car, said in a statement that it would cut production by 1,000 units this year "to address disruption in its supply chain and continued macroeconomic weakness in China".
Delays in receiving components from suppliers has hit the car maker's output and postponed deliveries.
The company, however, said its "fully reinvigorated portfolio of ultra-luxury high performance models" would support future growth.
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