Stellantis, one of the world’s largest carmakers, just slashed its earnings forecast, and here’s why.

Facing a tough industry slump and increased competition from China, the company is speeding up efforts to turn around its North American operations. Originally planning to cut dealer inventory levels by early 2025, Stellantis now aims to do it by the end of this year.

The company is also dealing with a drop in shipments—200,000 fewer vehicles in the second half of this year compared to last year. To move things faster, they’ll be offering higher incentives on 2024 and older models.

In a surprising profit warning, Stellantis said it expects to end the year with a negative cash flow between 5 to 10 billion euros, instead of positive. They’ve also cut their operating profit margin forecast from double digits to just 5.5% to 7%.

Stellantis, which was formed by the merger of PSA Peugeot and Fiat Chrysler Automobiles, is battling tough times ahead.

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