PARIS, France—Stellantis, the world's fourth-largest automaker, reduced its 2024 profit forecast and warned of higher-than-expected cash burn due to weak global demand and rising competition, particularly from China. The company, which includes brands like Chrysler, Jeep, and Peugeot, now expects a negative cash flow of €5-10 billion, significantly impacting its dividend and share buyback plans. Stellantis also cut its projected operating profit margin to 5.5%-7%, down from previous double-digit expectations, leading to a 14% drop in its stock, wiping out €6 billion in market value.

The company’s challenges are mainly in the U.S., where a decline in demand for Jeeps and pickup trucks has led to high inventory levels and forced price cuts. As a result, Stellantis saw a 40% drop in operating profit in the first half of the year. To address these issues, Stellantis plans to increase discounts and reduce production. CEO Carlos Tavares recently visited Detroit to develop a strategy to revive the struggling North American operations. The company has already laid off up to 2,450 workers at a Detroit-area plant, with the United Auto Workers union threatening a strike over contract disputes.