Stellantis NV dipped to a three-month low amid growing concerns about car demand in a subdued global economy and disappointing sales in Europe during the first quarter.
(Bloomberg) — Stellantis NV dipped to a three-month low amid growing concerns about car demand in a subdued global economy and disappointing sales in Europe during the first quarter.
Revenue in Europe, Stellantis’s biggest market, rose 10% after deliveries recovered, the company said Wednesday after months of logistics snags that left thousands of vehicles stranded. The region missed expectations while luxury brand Maserati’s pricing was “very weak,” Bernstein analyst Daniel Roeska wrote in a note to clients.
The shares fell as much as 2.4% in early Milan trading, the lowest level since Jan. 31.
As supply-chain problems ease, carmakers are set to struggle to maintain high prices that have underpinned margins in the aftermath of the pandemic. Successive price cuts from US rival Tesla Inc. — whose Model Y was Europe’s best-selling car during the first quarter — is adding to the pressure. Ford Motor Co. on Tuesday said it anticipated more downside on pricing as industrywide sales volumes “normalize.”
Order Challenge
“Our main challenge continues to be fulfillment of orders,” Chief Financial Officer Richard Palmer said on a media call. “We have improved the level of capacity we have on key logistics tracks” and made progress with integration of IT systems, which will help market share “into the middle of the year.”
New vehicle inventory was at 1.3 million cars at the end of March, reflecting a return to more normal levels, Stellantis said. Shipments during the quarter rose 7% after availability of semiconductors improved.
Total first-quarter revenue climbed 14% to €47.2 billion ($52 billion) with Stellantis reaffirming full-year guidance for a double-digit adjusted operating income margin and positive industrial free cash flow.
Pricing Challenge
In the first quarter, “pricing was relatively stable,” Palmer said. “We do have a good order portfolio in Europe at the moment, so short term pricing should be relatively stable too but clearly that depends on order intake.”
Europe has emerged as a focal point for a downturn as consumers in the region feel the pinch from a cost-of-living crisis and higher interest rates. Mercedes-Benz AG last week said demand in Europe is falling behind strong US and Chinese markets.
“Demand in holding up well notwithstanding lots of macro volatility” in Europe, said the 56-year-old, who will be stepping down by July after two decades at the company.
The “timing is right” to leave Stellantis, Palmer said. “It’s a reasonable time frame to go and do something different and I think the company is in great shape.”
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