Stellantis says inventories stabilizing after chip shortage hits Q3 revenues, shipments
The maker of Jeep SUVs and Ram pickup trucks doesn't expect inventory at U.S. dealerships to deplete further after a global microchip shortage took a bite out of revenues and shipments in the third quarter.
Issues with the semiconductor supply are forecast to continue over the next year, Stellantis NV's chief financial officer said Thursday, but the automaker has begun to see some relief from Asian suppliers who had struggled to produce amid the COVID-19 pandemic. That could be a welcome sign to consumers who have seen vehicle prices rise in time for some of the most popular months of car buying, as well as for autoworkers whose plants have idled in some cases for weeks because of a lack of chips.
"With some improvement in semiconductor availability in October, we do not expect U.S. inventory to reduce further," CFO Richard Palmer said during a conference call on the results. He predicted some dealer restocking in the final three months of the year.
"The volatility we're seeing related to the supply in semiconductors is not necessarily a short-term item. We still see this continuing for 12 months or so hopefully as things start to improve, but it's going to be sort of incremental. There's not going to be a big one-off improvement."
Palmer confirmed Stellantis' full-year guidance for an adjusted operating income margin of 10% for 2021 even as net revenue decreased 14% to $37.2 billion (32.6 billion euro) and global shipments fell 27% for the July-to-September quarter. High prices and new Jeep and electrified offerings are keeping the transatlantic automaker positive about its full-year results assuming no further deterioration of the microchip supply or significant COVID-19 lockdowns.
Shares were down less than 1% early Thursday in Milan and Paris, but they were trading up slightly in early trading on the New York Stock Exchange.
Unlike its Detroit rivals, the merger between Fiat Chrysler Automobiles NV and French rival Groupe PSA reports earnings for the first and second halves of the year. The automaker will share 2021 financial results after the new year.
Shipments totaled 1.131 million vehicles in the third quarter. The shortage of the microchips used in electronics from steering wheels and heated seats to infotainment systems has idled some plants for weeks. Too few chips halted production for the first time this week at the new Mack Assembly Plant in Detroit that makes the Jeep Grand Cherokee L three-row SUV, idling it for three days. No downtime at any plant in North America is scheduled for next week, however.
From July through September, Stellantis lost about 30% of planned production, or about 600,000 vehicles, the company estimated. That contributed to U.S. sales falling 17% year-over-year. Global inventory at the end of September was at 689,000 vehicles, down from 1.195 million a year ago, according to Stellantis. North American dealer inventory was down 272,000 vehicles from December.
Average transaction prices for the automaker's vehicles in the United States were up almost 14% to $48,867 as vehicles were taking 40% fewer days to sell in the third quarter, according to auto information website Edmunds.com Inc.
“Stellantis benefited from slightly more robust passenger car sales than its Detroit 3 counterparts in Q3," Ivan Drury, Edmunds' senior manager of insights, said in a statement. "But because the company has more niche sporty offerings in this segment, it hasn’t necessarily benefited from or captured the consumers that Ford may have lost through the shuttering of the Focus and Fusion like the Asian automakers have."
North America brought in $18.02 billion net revenue, down 16%. Shipments of 394,000 vehicles, down 29%, resulted from the chip shortage and the discontinuation of the Dodge Grand Caravan minivan and Journey SUV. Production of the new Jeep Grand Cherokee L three-row SUV, however, partially offset those figures.
Stellantis sales made it the market leader in South America and Europe's commercial vehicle sector. Revenues rose 43% in South America from favorable mix and pricing, but dropped 21% in Europe. Revenues also fell 10% in the Middle East and Africa, but increased 23% in Asia from boosted volumes. For Maserati, revenues were up 31% as shipments rose, and the luxury brand began deliveries of its MC20 super sportscar.
Stellantis also has been doubling down on its electrification efforts. During Jeep's 80th year, it last month officially revealed the next-generation two-row Jeep Grand Cherokee, which has a plug-in hybrid option. Last week, it also announced plans for two joint ventures to build a battery plant in North America each with LG Energy Solution and Samsung SDI.
The automaker says it will invest $35.5 billion into electrification by 2025. It expects to have a fully electric offering for each of its nameplates in the United States come 2029 and have plug-in hybrids and EVs represent 40% of U.S. sales by 2030.
But Drury said investors will have interest in more immediate issues for the automaker like vehicles in overlapping segments from its 14 brands, particularly in Europe, and brands that struggle to resonate with consumers.
"It’s been almost a year since FCA and PSA inked the merger, and we have yet to see any definitive steps that Stellantis is taking toward either revamping the Chrysler brand, or finally giving it the axe," he noted.
Tavares has said he is giving Stellantis' brands a decade to prove their value and grow. The automaker in September appointed Chrysler its own CEO — Christine Feuell, a former executive of Honeywell Safety and Productivity Solutions and Ford Motor Co. Palmer said previous FCA brands will start adopting PSA platforms by the end of 2022 or in early 2023.
During the third quarter, Stellantis also announced plans to acquire First Investors Financial Services Group and no longer be the only major automaker without a captive financial group in the United States. The Wagoneer and Grand Wagoneer launched at Warren Truck Assembly Plant, as well.
Stellantis' third-quarter revenue surpassed its crosstown rivals. Ford Motor Co. said it generated $35.7 billion in revenue, down 5%, in the third quarter and made profits of $1.8 billion. General Motors Co. brought in $26.8 billion in revenue, down 25%, in the third quarter for a net income of $2.4 billion.