Forvia Cuts Forecasts Due to Auto Demand Weakness

By Nathan Vifflin

(Reuters) – French car part supplier Forvia has revised its annual sales and profit forecasts for the second time in three months, primarily due to weakness in the European and North American markets and delays in China.

CEO Patrick Koller noted, “We have lost, versus last year, about 2 million vehicles, and maybe this might increase until the end of this year. This gap is concentrated on the second half.” This statement reflects the ongoing lag in global auto demand during a recent conference call.

Forvia projects its sales to range between 26.8 billion and 27.2 billion euros ($29.9 billion and $30.4 billion) this year, lowered from an earlier forecast of 27.5 billion to 28.5 billion euros. The expected operating margin has also been adjusted to 5.0% to 5.3% of sales, down from the previously predicted 5.6% to 6.4%.

Previously, in July, the company had already lowered its targets due to declining auto demand and a slowdown in the trend towards electrification. Additionally, Forvia announced it would expedite its job-cutting plans in Europe. Out of the planned 10,000 reductions, it anticipates implementing more than 2,800 layoffs by the end of the year, with a total headcount decrease of 5,800 by the close of 2025. Most of these cuts, which were initially scheduled for 2024-2028, will now be completed by the end of 2027.

Koller emphasized, “The objective is clearly to accelerate. That’s why we are mentioning that more than 90% will be done one year before the end of the project, manifesting the acceleration.”

Forvia supplies automakers such as Stellantis (NYSE:STLA) and Volkswagen (ETR:VOWG_p), both of which are facing challenges due to strikes, potential plant closures, and diminishing demand for electric vehicles.

Despite the forecasts, Forvia’s shares rose 4.8% by 0746 GMT, making it the second biggest gainer on France’s SBF 120 index after reversing an initial decline. Meanwhile, the autos and parts sub-index on Europe’s benchmark STOXX 600 increased by 1.7%.

*($1 = 0.8959 euros)*