Shares of European automakers hemorrhaged on Monday as Stellantis and British luxury brand Aston Martin issued profit warnings, citing broader industry challenges and difficulties in the world’s largest auto market, China.

Stellantis on Monday cut its full-year guidance for 2024 due to deteriorating “global industry dynamics” and intensifying competition from China, sending Milan-listed shares lower at the open.

The Franco-Italian conglomerate, known for brands such as Chrysler, Dodge, Jeep and Maserati, warned of lower-than-expected sales “in most regions” in the second half of the year. It now forecasts an adjusted operating income (AOI) margin of between 5.5% and 7.0% for the full year 2024, below a “double-digit” outlook.

“The deteriorating global industry context reflects a lower market forecast for 2024 than at the beginning of the period, while competitive dynamics have intensified due to both increased industry supply and increased Chinese competition,” the automaker said.

It also lowered projections for its industrial free cash flow to a range of -5 billion euros ($5.58 billion) to -10 billion euros, from a previous “positive” guidance, as a result of lower anticipated AOI margin and temporarily higher working capital. during the second half of this year.

The automaker further attributed the revisions to its guidance to “decisions to significantly expand remediation actions on performance issues in North America,” but did not provide additional details. Earlier this year, Stellantis was sued by shareholders in the US who claimed the automaker defrauded them by hiding increased inventories and other items, Reuters reported.

This month, Stellantis’ U.S. dealer network criticized CEO Carlos Tavares for recent declines in the company’s sales, cuts in factory production, among other decisions they assessed as detrimental to the phone maker’s business. automobiles.

The automaker’s European shares closed down 14.7% on Monday. Shares on the New York Stock Exchange hit a new 52-week low on Monday, closing down 12.5% ​​at $14.05.

British luxury car maker Aston Martin, whose iconic models gained notoriety for their appearances in the James Bond film franchise, also flagged cuts to its profit margin and production target for the year.

It announced a reduction of approximately 1,000 units in response to “disruption in its supply chain and continued macroeconomic weakness in China”, anticipating that its earnings before interest, taxes, depreciation and amortization (EBITDA) for 2024 will now be lower than from the previous year. performance.

The company said it no longer expects to achieve positive free cash flow in the second half of this year and noted that its full-year gross margin is anticipated to be below 40%, compared with a previous target of around that threshold.

Aston Martin said it is “addressing supply chain challenges and continues to recognize the significant market opportunity that China represents as its macroeconomic environment improves.”

The company’s shares closed 24.5% lower on Monday, their worst one-day drop since March 2020 according to LSEG data.

The Stellantis and Aston Martin profit warnings come days after German automaker Volkswagen once again cut its own full-year outlook on Friday, now forecasting an operating return on sales of 5.6% in 2024, from a previous range of 6.5-7.0%.

In a stock exchange document translated by Google, it attributed its reduced projections to a delay in the evolution of its passenger car and commercial vehicle brands, along with a “deterioration in the macroeconomic environment, leading to increased risks, particularly for the group of brands “Core”.

European automakers have been struggling to maintain their position in China, whose own automakers are now targeting an expansion of their electric vehicle sales in Europe. The broader shift toward electric vehicles is “putting increasing pressure on European automakers, while overall new car sales fail to return to pre-pandemic levels in their home markets,” ING analysts warned earlier. of this month.

Volkswagen shares fell about 2% when markets closed in London.