Why Stellantis, Ford, and GM Stocks Aren’t Getting Hit By a French Scare

Renault is one of the biggest French car makers. (Photograph by Kazuhiro Nogi/AFP/Getty Images)

Shares of French car maker Renault were plunging by the most since 2020 on Wednesday after it said profits and cash flow will be substantially lower than previously thought. But its automotive peers were relatively unaffected.

Renault cited poor sales in June and a weakening market in France in particular. The news was a big surprise: The car maker had recently been doing well despite worries of the impact of tariffs and trade wars.

Renault’s struggles have the potential to spill over others, but the damage seemed contained. Stellantis , which owns French brands Citroën and Peugeot, as well as Chrysler and Dodge, slipped 0.6% just after the market opened. Ford was down 2% and General Motors added 0.5%.

By contrast, Renault’s Paris-traded shares plunged 18%, putting them at their lowest price since January of last year. The company’s American depositary receipts fell 4.6%. The moves suggest that investors see the problems as being more specific to Renault.

Renault elevated former Chief Financial Officer Duncan Minto to interim CEO on Tuesday. The company said it would now focus on value creation over volumes, and it is stepping up its program to cut costs.

“What’s really changed fundamentally in the last two months? The retail market’s been slow across Europe and we haven’t seen any positive dynamic at all in competitive positioning and pricing,” Minto said on a call with analysts. “We’ve seen actually things get tougher slightly.”

The profit warning could be a temporary setback, according to Morningstar strategist Rella Suskin.

“Following multiple periods of meeting or beating expectations, we think today’s result has sparked a share price overreaction,” she said. “While we foresee Renault’s margins and free cash flows settling at lower levels than current, we still see large upside in the stock.”

Write to Brian Swint at brian.swint@barrons.com