Successive profit warnings, European and American automotive stocks plummeted

Have European and American car companies collectively "stalled"? On Monday, European car stocks fell by nearly 4% in intraday trading, reigniting market concerns.

The sharp decline caused the market value of the STOXX Automotive and Parts Index to evaporate nearly $10 billion, with Stellantis' stock price falling by 14%, Renault by nearly 6%, and Volkswagen by 2.7%. Stellantis, Aston Martin, Volkswagen, Mercedes-Benz, BMW, and others have all issued profit warnings.

In contrast, on the last trading day before the National Day holiday in the A-share market, 28 automotive concept stocks collectively surged, with 9 companies including Saic Motor, Great Wall Motors, and Jianghuai Automobile hitting the daily limit. The festive atmosphere in the A-share market did not boost European car stocks, signaling a shift in the automotive market from west to east?

Citigroup predicts that European and American car companies will remain weak in the coming weeks, and believes that Stellantis' recovery is unlikely to last until 2025, when the European and American automaker will reset inventory, leading to more favorable results.

Profit forecasts trigger a sharp drop in automotive stocks, European and American car companies collectively "collapse"

On Monday, Stellantis issued a profit warning. The enterprise group, which integrates brands such as Peugeot, Citroën, Opel, Fiat, and Chrysler, significantly lowered its profit margin forecast for this year, citing "plans to reduce production in a slowing and more competitive automotive market, and increase promotional expenses."

The company stated in a statement today that the adjusted operating profit margin for this year will narrow to between 5.5% and 7%, a double-digit decrease from previous forecasts.

Stellantis now also expects industrial free cash flow to be between negative €5 billion (US$5.6 billion) and negative €10 billion, lower than the previously forecast positive cash flow. The company also expects to reduce production by 200,000 vehicles in the second half of this year to achieve sales targets, doubling the planned production cut.

Market concerns were ignited, with Stellantis' stock price falling by over 14%, hitting an intraday low since December 2022.

UK's Aston Martin also lowered its forecast for this year, with its stock price falling by 23% today, marking the largest decline since May 1st and a 37% decline year-to-date.

Japanese automotive giant Toyota saw its stock price fall by 7.6% today.

Bad news from the European automotive industry continues to pour in. Recently, **Germany's three major automakers: [Mercedes-Benz](https://wallstreetcn.com/articles/3728463? Mercedes-Benz revised its 2024 performance guidance on the 20th, expecting EBIT (Earnings Before Interest and Taxes) this year to be "significantly lower than" the previous year, causing a sharp 8% drop in stock price during trading; on the 28th, Volkswagen once again lowered profit expectations, leading to a nearly 4% plunge in stock price; BMW Group also reduced its full-year profit forecast to 6% on the 10th, down from the previous 8%-10% forecast.

Chinese Auto Companies Rise Against the Trend, 9 Companies Hit the Limit Up

While European car companies are mired in profit warnings and plummeting stock prices, Chinese auto stocks are soaring in the A-share market, delivering impressive results.

On September 30th, benefiting from the overall rise in A-share prices, 28 A-share auto concept stocks collectively experienced significant gains, with companies such as Altair, CIMC Vehicles, Lifan Technology, Great Wall Motors, Jiangling Motors, JAC Motors, Zotye Auto, Siles, and BAIC BluePark hitting the limit up.

Companies with gains of over 8% include King Long Motor, China National Machinery, Changan Automobile, Zhongtong Bus, Dongfeng Motor, Ankai Bus, and BYD; companies with gains between 6%-8% include Haima Automobile, SAIC Motor, FAW Liberation, Foton Motor, China Automotive Research, Jinbei Auto, GAC Group, Yutong Bus, China Railway Material, and China National Heavy Duty Truck. Only ST Shuguang and *ST Hanma had lower gains, at 4.9% and 0.56% respectively.

"With local customers beginning to favor domestic brands, Volkswagen's scale advantage in China may have reached its peak," said Bloomberg automotive analyst Matthias Schmidt.

Citi predicts that European and American car companies will remain weak in the coming weeks, and believes that Stellantis's recovery is unlikely to last until 2025, at which point the European-American automaker will reset inventory, leading to more favorable results.

Citi analyst Harald Hendrikse stated: "We believe the current weakness will continue until October, possibly supported by accelerated global interest rate cuts."

While traditional automotive giants are collectively "losing ground," Chinese emerging auto companies are rising strongly. Perhaps, the global automotive industry landscape is being reshaped