Troubled multi-brand Stellantis, undermined by U.S. inventory problems, a management shakeup, and a profit warning, was downgraded again Wednesday by a credit rating agency, and its shares have now fallen more than 50% since March.

Stellantis, an investor favorite at the start of 2024, has come under increasing stock market pressure, initially because of the inventory buildup in the U.S. at its Jeep and RAM brands. This was followed by a management shakeout in the U.S. and Europe, and a profit warning at the end of last month.

Stellantis cautioned shareholders that the profit margin in 2024 would be closer to 5.5 to 7.0%, not 10%. German automakers also issued profit warnings, but not on this scale.

Rumors that legendary CEO Carlos Tavares was leaving the company turned out to be just a reminder that he was due to retire in 2026. Tavares led the merger of Fiat-Chrysler and Peugeot Citroen in 2021. Brands include Opel, Vauxhall, DS, Alfa Romeo, Dodge, Chrysler, and Maserati. At the Paris Car Show Tuesday Tavares said decisions on whether to dump some brands will begin in 2026.

Analysts say Chrysler, Alfa Romeo, and the DS premium wannabe brand look the most vulnerable.

A week ago, Tavares described reports of an imminent merger with Renault as “speculation” while Renault CEO Luca de Meo called them “rumors”.

Moody’s Ratings said it had changed its outlook for Stellantis to “negative” from “stable”, because of the severity of the cash burn expected in the second half of 2024. Moody’s noted the profit warning but expected operating performance to bounce back next year.

“The guidance adjustment for fiscal 2024 is driven by management’s decision to accelerate U.S. inventory remediation measures but also weakness in other regions including Europe,” Moody’s said.

There was some good news.

“Today’s rating action is further supported by Stellantis strong liquidity position which provides a cushion, until operating performance trend and free cash flow improves next year,” Moody’s said.

S&P Global Ratings downgraded its outlook to negative at the end of September. It called Stellantis’s action the most significant profit guidance cut among European carmakers so far this year. S&P also reckoned next year things would look better.

“At the same time, we see potential for a meaningful recovery of margins in 2025 mainly due to a rebound in sales, on the back of the company’s model offensive and materially lower incentives,” S&P said.

Investment bank UBS also saw some positives.

“Stellantis remains among our top picks and we think the under-performance of the shares offers an attractive entry point, with its strong product cycle and capital allocation,” UBS said in a report.

Investment researcher Bernstein said Stellantis had lost some investor support because it had dismissed their concerns that the buildup in stocks in the U.S. might be a problem. The extent of the profit-forecast cut meant the recovery in profits had much scope to succeed.

“However, we worry that 2025 will be too short a timeframe to determine whether the new team will have been able to address the fundamental issues,” Bernstein said in a report.

At the Paris Car Show Tavares was able to point to launches from its Chinese affiliate Leapmotor, which has allowed Stellantis to keep ahead of the European competition with locally assembled models like the TO3, and C10. A new model, the B10 compact SUV, was unveiled at the show.

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