Profit warnings from Stellantis and Aston Martin lead to sharp drops in their share prices, as concerns about China's economic woes persist.

• The conglomerate, which owns brands such as Chrysler, Dodge, Jeep and Maserati, announced that it expects lower-than-anticipated sales "in most regions" during the second half of the year.
• Stellantis has revised its forecast for the full-year 2024 adjusted operating income (AOI) margin, which is now expected to fall between 5.5% and 7.0%, down from its previous "double digit" outlook.
• The James Bond movie franchise helped Aston Martin gain notoriety for its iconic models, but the company also announced cuts in its profit margin and production target for the year.

On Monday, European carmakers' stocks bled early as Stellantis and Aston Martin issued profit warnings, citing broader industry challenges and difficulties in the Chinese market.

On Monday, Stellantis reduced its 2024 annual forecast due to unfavorable "global industry dynamics" and intensified competition from China, causing Milan-listed shares to decline upon opening.

The French-Italian conglomerate, which owns brands such as Chrysler, Dodge, Jeep, and Maserati, has forecasted lower-than-expected sales "in most regions" during the second half of the year. As a result, the company has revised its outlook for the adjusted operating income (AOI) margin for the full-year 2024 period, now estimating it to be between 5.5% to 7.0%, down from a previously projected "double digit" figure.

The automaker stated that the global industry backdrop has deteriorated, resulting in a lower 2024 market forecast compared to the beginning of the period. Additionally, the competitive dynamics have intensified due to both rising industry supply and increased Chinese competition.

The company lowered its industrial free cash flow projections to a range of -5 billion euros to -10 billion euros, from a previously positive outlook, due to a lower anticipated AOI margin and higher working capital in the second half of the year.

Stellantis was sued by U.S. shareholders for allegedly hiding rising inventories and other issues, according to Reuters. The automaker attributed the revisions to its guidance to "significantly enlarge remediation actions on North American performance issues," but did not provide additional details.

The U.S. dealer network of Stellantis criticized CEO Carlos Tavares for the company's recent sales decreases and factory production cuts, which they deemed harmful to the automaker's business.

At 10:15 a.m. London time, the car manufacturer's stock was declining by 13%.

Aston Martin, known for its iconic models featured in the James Bond movies, announced cuts in its profit margin and production target for the year.

The company announced a 1,000-unit reduction due to disruptions in its supply chain and ongoing economic weakness in China, predicting that its EBITDA for 2024 will be lower than the previous year's performance.

The company announced that it will not achieve positive free cash flow in the second half of this year and its full-year gross margin is expected to be below 40%, which is lower than its previous target.

Aston Martin is addressing supply chain challenges and recognizing the significant market opportunity in China as its macroeconomic environment improves.

At 10:15 a.m., the company's shares were down approximately 23%, with Reuters reporting that the company was on track for its worst one-day decline since March 2020 after dropping to 26% earlier in the session.

Volkswagen has revised its annual outlook for an operating return on sales of 5.6% in 2024, while Stellantis and Aston Martin issued profit warnings.

The company's lowered projections were due to slow progress in its passenger and commercial vehicle brands, as well as a deteriorating macroeconomic environment, which increased risks, particularly for the Core brand group.

European carmakers are facing pressure to retain their market share in China as the country's own automakers aim to expand their electric vehicle sales in Europe. ING analysts warned earlier this month that the broader shift towards EVs is putting European carmakers under pressure, while total new car sales in their home markets have not yet returned to pre-pandemic levels.

Volkswagen shares were down 2.8% at 10:14 a.m. London time.