Valeo lowers sales forecast amid European automotive sector challenges
Valeo lowers sales forecast amid European automotive sector challenges
Continuing problems for the European automotive industry mean French automotive supplier Valeo has cut down annual sales forecasts for the second time in 2013. A sluggish Chinese economy and uncertainty over an EV transition were blamed for the decision, according to the company.
CEO Christophe Perillat voiced concern over the market overall but said Friday that it’s softer than expected in all regions. “The market is softer than anticipated in all geographical areas, for different reasons; so we see a market that is softer, and for reasons in the way,” he said.
High production costs, a complex transition to electric mobility, declining demand, and yielding to competition of the Chinese manufacturers have already become some of the difficulties that European automotive industry is struggling with. Delayed product launches and ongoing uncertainty about EV adoption are to blame, but Valeo warned these factors could exacerbate delays in the production of automobiles around the world.
Valeo now says sales will fall short of about 21.3 billion euros (USD 23 billion) in 2024, down from an earlier forecast of 22 billion euros. While lower sales forecast, the company has stuck to its margin and free cash flow guidance for the year.
Valeo, in its latest financial results, said sales fell 5 percent to 5 billion euros (USD 6.57 billion) in the July-September quarter, missing analysts' estimates in a company compiled consensus of 5.1 billion euros. Specialising in vehicle component design and manufacturing — including electric models — the firm has grappled with product delays by its customers.
But Valeo is not alone: like the French rival it, Forvia booked a drop in third-quarter sales, blaming the slump on weaker Chinese demand and tougher competition from local producers.
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As the European auto sector navigates these turbulent times, stakeholders will be closely monitoring Valeo's strategies and performance in the months ahead.
