Forvia trims outlook on low auto demand, eyes deals with Chinese carmakers

By Nathan Vifflin

(Reuters) - Forvia, the world's seventh largest car parts supplier by revenue, cut its sales and margin forecasts on Wednesday due to sluggish global auto demand and a dispute with a supplier for its Mexican car interior business, knocking its shares.

Forvia expects its sales to be at the lower end of its guidance of between 27.5 billion and 28.5 billion euros ($29.8 billion and $30.9 billion) this year. Similarly, its operating margin should come at the bottom end of its 5.6% to 6.4% range.

The outlook is based on the estimated worldwide automotive production of 88.7 million vehicles this year, down 2% compared to 2023, Forvia said in an earnings statement.

"In the first half of the year, the automotive environment was characterized by broadly flat automotive production year-on-year and a slowdown of the pace of electrification in Europe," Forvia said.

Its half-year operating margin was hit by a one-off extra cost of 47 million euros in the interiors segment due to a dispute with a local supplier in Mexico, finance chief Olivier Durand said during a press call.

Forvia, which supplies parts to Stellantis, Volkswagen and Ford, and is also active in China, is fighting to recover its margins as the automotive sector grapples with falling auto demand and competition from Chinese manufacturers.

But for Forvia, Chinese carmakers could pose a growth opportunity, as Durand said the group was seeking more deals with the manufacturers looking to set up production in Europe and across the world.

He mentioned Chery in Spain, Leapmotor in Poland, and BYD's plants in Turkey, Mexico and Brazil, without confirming whether Forvia had concluded any contracts so far.

"I'm sure that by the end of the year you'll have other projects materialising and a greater presence for us with these customers. I can't say any more than that," he said.

Forvia on Tuesday said it would bring its Asian partnership with BYD in Europe, marking the first deal of its type for the company.

($1 = 0.9219 euros)

(Reporting by Nathan Vifflin in Gdansk; editing by Milla Nissi)