Dodge maker Stellantis records a 27% drop in revenue

automobile giant Stellar On Thursday it reported a 27% decline in third-quarter net income but said it was making progress in resolving operational issues such as inventories in the United States.

The Netherlands-based company, which owns well-known brands such as Jeep, Dodge, Fiat, Chrysler and Peugeot, said net income for the July-September period amounted to 33 billion euros ($35.8 billion). Analysts expected third-quarter net income to reach €36.6 billion, according to a consensus compiled by the LSEG.

The firm attributed the decline primarily to “lower shipments and an unfavorable mix, as well as price and exchange rate impacts.”

It said it was on track to deliver about 20 new models this year, adding that it was making good progress in reducing bloated inventories, especially in the US.

Its total stocks fell by 129,000 units between January and September to 1.3 million. The automaker said U.S. dealer inventory fell by 80,000 units between June 30 and Wednesday. Stellantis said it will meet its goal of reducing US inventories by 100,000 units by the end of November.

Doug Ostermann, Stellantis’ chief financial officer, admitted that quarterly performance was “below our potential” but said U.S. inventories had “reduced significantly” and were poised to meet the company’s goals.

“In Europe, strict quality requirements delayed the start of certain high-volume products, but as advancements resolve challenges, we will soon benefit from the significantly expanded reach that our new generational wave of products will bring through 2025 and beyond.” , he said in a statement on Thursday.

The transatlantic automaker issued a profit warning in late September, cutting its full-year guidance due to deteriorating “global industry dynamics” and a push to expand corrective actions on performance issues in North America.

Milan-listed shares of Stellantis, which have lost more than 40% so far this year, closed 3% higher on Thursday. Jefferies analysts noted that the automaker’s net income for Europe beat expectations by 14%.

American car brands Jeep, Ram, Dodge and Chrysler have had problems with their European owner. Of all brands in the U.S., Stellantis has some of the highest vehicle inventories at dealerships, according to Cox Automotive, suggesting lower consumer demand for the products.

Stellantis is currently suing the United Auto Workers over strike threats, escalating a long-running battle between the automaker and the American union, according to a CNBC report.

Like many in the auto industry, Stellantis has been dealing with a perfect storm of challenges on the path to full electrification, including faltering global demand for electric vehicles (EVs) and competition from China.

The pressure on European carmakers is set to increase further next year when emissions reduction targets come into force. In this context, car manufacturers have recently launched a series of low-cost electric vehicle models, well aware of the need to boost sales.

—CNBC’s Robert Ferris contributed to this article.