Valeo lowers sales targets for 2025 as EV growth stalls

A logo of French automotive supplier Valeo is seen in Paris, France, February 20, 2023. REUTERS/Sarah Meyssonnier

By Nathan Vifflin and Jesus Calero

(Reuters) -French car parts maker Valeo on Thursday cut its net sales guidance for 2025, citing lower-than-expected growth in the automotive market and particularly for electric vehicles.

Europe’s auto suppliers including Valeo, Forvia and Continental are striving to balance cost-cutting with supplier demands amid a slower-than-expected shift to EVs.

Valeo now anticipates net 2025 sales in a range of 24.5 billion to 25.5 billion euros ($26.49 billion-$27.57 billion), down from a previous estimate of approximately 27.5 billion euros.

“We built the Move-Up strategic plan on the basis of a market that was expected to grow to 98 million cars, 98.5 million to be exact by 2025. The market has changed,” CEO Christophe Périllat said on a call with reporters.

Valeo, which designs and produces components and integrated systems for vehicles, said its full-year net sales rose to 22.04 billion euros in 2023, broadly in line with analysts’ forecast of 22.07 billion euros in a company-provided consensus.

The company said its Systems Business Group experienced a temporary production drop for some European electric vehicle platforms, exacerbated by significant inventory drawdowns.

It added that sales at its high-voltage electrification business, which had doubled in the first half of the year, had slightly improved in the fourth quarter after dropping sharply in the third.

During a call with analysts, Périllat said contracts with carmakers could provide for compensation for suppliers when volumes ended up lower than planned.

He also said the group is now focusing on internal combustion and hybrid drivetrains alongside EVs in its Polish plant, noting its now closed German plant was too dependent on EVs.

Valeo said last month it will cut 1,150 jobs worldwide, including 735 in Europe, incurring a 300 million euro cost over the next two years.

Based on cautious projections, it said it expects an uptick in organic growth, fuelled by profitable contracts signed since 2022.

($1 = 0.9248 euros)

(Reporting by Nathan Vifflin and Jesus Calero. Editing by Jane Merriman, Kirsten Donovan and Nick Zieminski)