Stellantis no longer expects positive free cash flow this year, predicting it will burn through more cash than initially projected.
The company cited worsening trends in the auto industry, higher costs related to restructuring its U.S. operations, and increased competition from China in the electric vehicle sector. This was reported by Reuters.
The company now expects to burn between €5 billion and €10 billion in cash this year, following a lowered estimate for its adjusted operating margin, which it currently forecasts between 5.5% and 7%.
The downward revision is largely driven by Stellantis’ decision to accelerate inventory normalization in the U.S. As a result, it plans to reduce vehicle deliveries to North America by over 200,000 units in the second half of the year—double the original estimate.
Additionally, Stellantis will increase incentives on older vehicle models and invest in productivity improvements. The lower-than-expected vehicle sales across several regions will also negatively impact the operating margin in the second half of the year.
With this updated forecast, Stellantis joins automakers such as BMW, Mercedes, and Volkswagen, who recently downgraded their full-year outlooks. British automaker Aston Martin also issued a negative forecast, citing supply chain disruptions and challenges in the Chinese market.
