European Auto Stocks Plunge as Automakers Issue Warnings

European auto stocks suffered a significant decline on Monday, losing nearly 4% after Stellantis, Volkswagen, and Aston Martin issued profit warnings, exacerbating concerns over the sector’s earnings outlook.

Stellantis, the world’s fifth-largest carmaker, saw its shares drop 14% after cutting forecasts, citing rising costs and increased competition from Chinese electric vehicles.

Volkswagen reduced its annual outlook for the second time, while Aston Martin cut its core profit forecasts due to supply chain disruptions and weakening demand in China. The STOXX Auto & Parts index lost nearly $10 billion in value.

Analysts warn that sector weakness may persist, with earnings expected to fall 14% in 2024. Despite low valuations, autos remain the most underweighted sector among regional fund managers.