European bank Berenberg has turned more cautious on Stellantis, the automaker behind brands like Jeep, Peugeot, and Fiat, downgrading the stock to “hold” from a more positive rating and slashing its price target to €5.10 from €7.80. The move reflects growing concerns about the company's performance in North America, its most profitable market.
In a research note focused on European carmakers, Berenberg said Stellantis' North American profits are not improving as quickly as its shipments. That disconnect raises the stakes for the second half of the year, when the company typically aims to boost sales and clear inventory.
Why US inventory is the key worry
The bank flagged that US vehicle inventory is approaching 100 days of supply—a level that historically forces automakers to offer richer incentives and dealer discounts to clear lots, rather than simply slowing production. For Stellantis, which has been working to reduce bloated stock levels, this could pressure margins further.
Inventory days of supply measures how long it would take to sell all vehicles on dealer lots at the current sales pace. Around 60 to 70 days is considered healthy; above 90 often signals trouble. When inventory piles up, manufacturers typically resort to discounts, which eat into profit per vehicle.
Berenberg's caution is part of a broader reassessment of European automakers. The bank has recently upgraded BMW to buy on expectations of stronger cash flow and dividends, while also lifting its Porsche price target but warning that margin recovery will take years. It has also cut its Mercedes-Benz target, citing weak demand in China and rising costs.
What this means for investors
For everyday investors, a downgrade from a major bank is a signal that the near-term outlook for Stellantis shares has weakened. The new price target of €5.10 suggests limited upside from current levels, which is why the rating is now “hold” rather than “buy.”
Stellantis has been under pressure for a while. The company has faced challenges in North America, where it has lost market share and struggled with high inventory. Its margins have been squeezed by the need to offer discounts and by higher costs for electrification and new models.
The second half of the year is critical. Automakers typically see a seasonal boost in sales, but if US inventory remains high, Stellantis may have to choose between protecting margins and clearing lots. That trade-off is at the heart of Berenberg's caution.
Investors should also watch how Stellantis manages its transition to electric vehicles. The company has pledged to invest heavily in EVs, but that spending weighs on profits in the short term. If US inventory problems persist, the company may have less financial flexibility to fund those investments.
Berenberg's report is a reminder that automakers are navigating a tricky environment: slowing demand in some regions, intense competition, and the costly shift to electric powertrains. For Stellantis, the immediate challenge is to get US inventory under control without destroying profitability.
As always, a single analyst's view is just one opinion. But when a major bank cuts its price target by more than a third, it's worth paying attention to the underlying concerns—especially when they involve the company's most important market.
