• by Sarah Mahoney  @mahoney_sarah, October 1, 2024

Car sales are slipping industrywide, but even against that backdrop, Stellantis is warning investors to brace for bad news. The company is lowering its profit outlook as it faces ongoing sales weakness, a looming strike and furious dealers.

The company’s announcement comes as brands throughout the auto world report sales that have fallen in September and the third quarter, as consumers fret about high car prices and borrowing costs.

Stellantis, which owns such auto brands as Chrysler, Dodge, Jeep and Ram, says it now expects operating profits to be between 5.5% to 7% of total sales, not the double-digit number it forecast earlier. Two-thirds of that decline will be due to the company’s attempt to solve its widespread problems in North America, with the remainder due to the ongoing “deterioration of the global industry backdrop,” the Amsterdam-based company says in its release, as well as increased competition in China.

“Dealers stuck with parking lots filled with unsold cars are publicly criticizing Stellantis and its chief executive in unusually harsh terms,” writes Jack Ewing in the New York Times.  

In addition to a looming strike threat from the United Auto Workers, Ewing adds that Stellantis jacked up the prices of its products more than competitors and then waited longer before offering deals that would tempt them into showrooms. “High interest rates made those prices even more unpalatable to car buyers,” he adds. “Many people ready to trade in Jeep Wagoneers or Dodge Chargers that they bought three or four years ago can’t afford the latest models.”

Stellantis says it is slowing production and ratcheting up incentives.

In recent weeks, Stellantis’ stock has fallen as much as 50% from highs earlier this year.

As final sales for both September and the third quarter come in, auto sales are relatively flat, and still below pre-pandemic levels. GM reported a 2% dip in sales for the third quarter, with the worst declines in its Chevrolet brand, which dropped 6.4%. Sales at Toyota dropped 5.6% in the quarter, which was led by a decrease in interest in some of its most popular models, including the Camry, Rav4, and Corolla. On a daily selling basis, Toyota’s September sales fell almost 10%.

J.D. Power projects an industrywide decline in vehicle sales for September, with sales falling 13.2%, much of that due to a calendar quirk, and more or less flat for the third quarter.

Because of more significant incentives, the dollar decrease is more humbling: J.D. Power says average transaction prices fell 2.8% to $44,467 when compared to September 2023. Between lower sales and lower prices, the market research company says buyers likely spent $40.4 billion on new vehicles in September, 16.8% lower than a year ago.