French automotive supplier Valeo has revised its annual sales forecast downward for the second time this year, citing the adverse impact of a weakening Chinese economy and uncertainties surrounding the transition to electric vehicles (EVs).
The company expressed caution regarding the upcoming year, anticipating continued economic challenges globally, particularly in China, alongside new environmental regulations that may further pressure car manufacturers and potentially lead to additional delays in product launches.
“We see a market that is softer than anticipated, roughly in all geographical areas, for different reasons,” Valeo CEO Christophe Perillat stated during a media call.
The European automotive sector is grappling with numerous challenges, including elevated production costs, the complexities of transitioning to electric vehicles, declining demand, and increased competition from Chinese manufacturers. As a result, Valeo now projects its 2024 sales to reach approximately €21.3 billion ($23 billion), a decrease from its previous estimate of €22 billion, while maintaining its margin and free cash flow guidance for the year.
In its third-quarter results, Valeo reported a 5% decline in sales, totaling €5 billion for the July-September period, falling short of analysts’ expectations of €5.1 billion according to a company-compiled consensus.
The company, which specializes in designing and producing components and integrated systems for vehicles, including electric models, indicated that delays in product launches by customers and uncertainty surrounding EV adoption have adversely affected global automotive production.
In a related development, French rival Forvia also reported declining third-quarter sales, attributing the downturn to diminished demand from China and heightened competition from local producers.
