Stellantis (STLA), the company behind brands including Jeep and Chrysler, on Thursday reported a major revenue decline as it moves to slash inventories and boost flagging sales.
The automaker said its net revenue dropped 27% for the July to September quarter to 33.0 billion euros ($35.8 billion), largely due to poor sales in Europe and North America, its biggest markets. Third-quarter shipments fell by 20% compared to a year earlier because of Stellantis' attempts to slash U.S. inventory and production gaps in several models.
But the company said it's on track to launch some 20 new models this year across the world, such as the Alfa Romeo Junior and the Citroën Basalt. In the U.S., electric vehicles such as the Jeep Wagoneer S and Ram 1500 REV are planned.
U.S. dealer inventory was reduced by 80,000 units over the last four months, with plans to cut another 20,000 units by the end of November. Stellantis also aims to offer more generous incentives on vehicles made for the 2024 model year as its dealerships complain that high prices have hurt sales.
Revenue in North America fell by 42% last quarter. RBC Capital Markets (RY) analyst Tom Narayan said Thursday that revenue per car in the region declined to 41,555 euros ($45,118) from 44,227 euros ($48,067) a quarter earlier, which suggests that prices are falling "sharply."
Sales in the U.S. dropped 20% last quarter to 205,294 deliveries, which followed a similar 21% year-over-year decline in the second quarter. The last time Stellantis had a quarterly sales increase was in the second quarter of 2023.
"While Q3 2024 performance is below our potential, I'm pleased with our progress addressing operational issues, in particular U.S. inventories, which have been reduced meaningfully and are on track for year-end targets, as well as stabilization of U.S. market share," CFO Doug Ostermann said in a statement.
Stellantis' performance in North America has been rough in recent months, plagued by big recalls, plummeting profits, quality issues, and executive departures.
Ostermann has been Stellantis' chief financial officer for just a few weeks after the company announced a major executive shakeup that saw its old financial chief leave. The European automaker is also looking for a new CEO as Carlos Tavares plans to retire after his contract ends in 2026.
In recent weeks, Tavares' leadership has been criticized by the United Auto Workers (UAW) union -- which represents 43,000 Stellantis workers -- and the U.S. Stellantis National Dealer Council, which warned "disaster has arrived" at Stellantis. An heir to the Chrysler family declared his intent to buy the brand back from Stellantis and lambasted Tavares and other executives.
The automaker recently slashed its full-year guidance for adjusted operating income to between 5.5% and 7% for fiscal 2024, down from its prior "double-digit" target, and cut its forecast for industrial free cash flow.