Very difficult day on the stock market for Stellantis, which is feeling the repercussions of the review of Moody’s rating, which revised the outlook on the rating to negative and stable. However, the international agency confirmed the long-term rating of Baaa2 and the short-term rating of P-2. The market reaction was very negative, once again punishing Stellantis on the stock market.
Stellantis plunges with the European car sector
The car manufacturer’s stock fell by 5% to 8.354 euros. The performance since the beginning of the year was also very negative, recording -33% in the wake of the crisis in the European automotive sector. Today Michelin in Paris also fell by 8.8% after cutting its 2026 guidance, due to the slowdown in sales in North America.
Moody’s assessment: weak operating performance
The worsening of the outlook on Stellantis’s rating – explains Moody’s – reflects a weak operating performance, combined with uncertainty regarding the timing and extent of the company’s recovery in profitability and its return to positive cash flow generation.
Stellantis’ market share in Europe and the United States has declined since the first half of 2024, due to reduced inventory at dealer level, lower demand due to gaps in the model lineup and delays in new product launches. Additionally, challenging market conditions in Europe and the impact of tariffs on US imports have further put pressure on profitability and cash flow.
“We believe that, in addition to the recovery in volumes, further structural cost improvements and mitigation of tariff impacts will likely be necessary to achieve a level of profitability commensurate with the current Baa2 rating, especially if the launch of new products is slower than expected”
explains the agency.
Factors that support ratings
On the other hand, the agency believes that the current rating (Baa2) is supported by the size of the group and its positioning among the largest automotive manufacturers in the world, its diversified portfolio of brands and products, its balanced exposure to the two main markets, North America and Europe, the solid liquidity and the conservative financial policy of the group.
The outlook remains negative
The negative outlook reflects the risk that the failure to demonstrate improved performance in sales, profitability and cash flow generation in the coming quarters, in line with Moody’s expectations, could lead to a downgrade of Stellantis’ ratings.
Moody’s reminds that the rating could be downgraded if the adjusted EBIT margin (post restructuring) remains steadily below 5%, the adjusted debt/EBITDA ratio remains steadily above 3.0x and if the adjusted cash flow remains negative and/or liquidity weakens.
