Key Takeaways
- HSBC dropped Stellantis to “Reduce” from “Hold” with a price target of €4, down from €5.50, suggesting 21.8% downside potential
- U.S. dealer inventory climbed to 93 days’ worth in June 2026, representing a 120,000-unit year-over-year increase and approaching 2024’s problematic levels
- The automaker has initiated 19 U.S. recalls affecting 2.5 million vehicles so far in 2026
- HSBC dramatically reduced its 2026 adjusted operating income projection by 59% to €1.52 billion, suggesting just a 1% margin
- The investment firm expressed skepticism about any meaningful or lasting earnings turnaround
Shares of Stellantis declined in Paris trading Thursday following a significant downgrade from HSBC analyst Michael Tyndall, who moved the automaker from “Hold” to “Reduce” while slashing the price objective to €4 from €5.50. With the stock closing around €5.11 on July 2, the revised target represents approximately 21.8% potential downside.
The rating cut stems from two primary issues: escalating U.S. inventory levels and a proliferation of vehicle recalls.
According to HSBC’s analysis, Stellantis’ U.S. inventory reached 93 days of supply in June 2026, reflecting a 120,000-unit increase from the previous year. This level is dangerously close to the approximately 100-day peak experienced in 2024.
“We do not understand the logic of repeating past failures,” the HSBC note said.
During 2024’s inventory clearing efforts, Stellantis was forced to slash U.S. pricing by 500 to 600 basis points while curtailing production by roughly 200,000 units. HSBC cautioned that a comparable scenario may be unfolding.
Quality Concerns Mount
Regarding product quality, HSBC referenced NHTSA data revealing Stellantis launched 19 U.S. recalls encompassing 2.5 million vehicles in the first half of 2026. Approximately 2 million of these vehicles require hands-on inspection or mechanical fixes.
Throughout 2025, the manufacturer issued 53 U.S. recalls impacting 2.8 million vehicles.
In European markets, Stellantis registered 47 recalls during the initial six months of 2026 alone, nearly matching the 48 recalls issued throughout all of 2025. Meanwhile, all other major European automakers collectively reported just 45 recalls during the same first-half timeframe.
Profit Projections Slashed
HSBC slashed its 2026 adjusted operating income forecast by a dramatic 59%, bringing it down to €1.52 billion. This projection implies a mere 1% margin, falling short of the company’s own guidance calling for a “low single digit” margin.
The firm’s 2026 industrial free cash flow estimate plunged 50% to a negative €4.89 billion.
HSBC also raised questions about whether the company’s historically robust margins might indicate underinvestment. The firm suggested Stellantis “may need to invest more to reach a sustainable recovery.”
Stellantis currently trades at a 12-month forward price-to-earnings multiple of 5.6 times, representing a 32% discount compared to the global peer average of 8.2 times. Historically, the three-year average discount has hovered around 40%.
HSBC acknowledged some signs of U.S. market share stabilisation but called June 2026 results “mixed.” The broker’s bottom line: “We’re not convinced a sustainable recovery is underway.”
