Stellantis, the parent company of popular brands like Dodge, Jeep, and Chrysler, witnessed a significant decline in its stock as lackluster first-half results disappointed investors. The automaker attributed bloated inventories, heavy discounting, shifting product strategies, and restructuring costs as the primary factors behind the shortfall.

With net revenues amounting to €85.0 billion ($92.21 billion), slightly below the Bloomberg consensus estimate of €87.127 billion ($94.62 billion), Stellantis experienced a 14% drop compared to the previous year. Additionally, the company's net income fell by 48% to €5.6 billion ($6.1 billion), widely missing the €7 billion ($7.6 billion) Bloomberg consensus estimate.

Following the announcement, Stellantis shares in New York plunged more than 7% during early trading on Thursday. The company's other key metrics also disappointed, with adjusted operating income (AOI) falling by a whopping €5.7 billion, or 60%, compared to the previous year, amounting to €8.5 billion ($9.221 billion). The AOI margin, which measures profitability, dropped 440 basis points from last year to 10%, primarily due to a decline in shipments, product mix, and FX headwinds.

Stellantis CEO Carlos Tavares expressed his disappointment, stating, "The Company's performance in the first half of 2024 fell short of our expectations, reflecting both a challenging industry context as well as our own operational issues. We have significant work to do, especially in North America, to maximize our long-term potential."

During an analyst call, Tavares mentioned that the company is currently in a transition period and will take corrective action. Stellantis plans to launch several new products, reduce older inventory (particularly in North America), and continue its "multi-energy" strategy, which involves various types of electrified and internal combustion powertrains.

Natalie Knight, Stellantis CFO, emphasized the company's focus on North America, stating, "We are pushing hard in North America; it's our biggest territory." To improve sales and reduce inventory bloat, Stellantis intends to cut prices and decrease production in the region. The automaker may also consider discontinuing unpopular models and reviving successful ones like the Dodge Charger to regain market share.

The disappointing performance from Stellantis follows similar discouraging results from its Big Three rivals, General Motors (GM) and Ford, earlier this week. Despite an earnings beat and a guidance boost, GM faced a decline in its shares as it postponed the start date of an EV plant, leading analysts to speculate whether the company's earnings peak was in the past. Ford also experienced a market backlash due to a significant profit miss attributed to rising warranty and recall losses.

Stellantis investors' disappointment coincides with the upcoming release of results from other major multinational automakers, Volkswagen and Toyota, scheduled for next Thursday, August 1. The industry will eagerly await their performance to gain further insights into the current state of the automotive market.

In summary, Stellantis witnessed a plunge in its stock as lackluster first-half results failed to meet expectations. The company acknowledged the need for improvement, particularly in North America, and plans to implement corrective measures while focusing on launching new products, reducing inventory, and maintaining its multi-energy approach.