Leaderless conglomerate Stellantis is treading water as it tries to fend off automotive industry turmoil in Europe, restore profitability and decide what to do with all those brands.
A new leader is expected to be appointed by the end of June.
Former CEO Carlos Tavares shocked shareholders by quitting in December, about a year before the end of his contract. Chairman John Elkann has taken over as interim CEO. Tavares orchestrated the massive merger between Fiat Chrysler and France’s Groupe PSA in 2021 and the 14 brands. Many of the brands compete in the same market, including Citroen, Peugeot, Fiat, Vauxhall, and Opel in the European mass market. Lancia, DS, Alfa Romeo and Abarth sit in the wannabe premium sector, and Dodge, Ram, Jeep and Chrysler in the U.S. Storied Italian sportscar maker Maserati sits atop of the list.
Investors praised Tavares for his success in bringing together the brands, which often appeared to fight against each other for sales. His methods made impressive profits quickly, as overlapping technologies were dropped and economies of scale exploited. But his credibility was undermined by the collapse of profitability in North America. This set off a profit warning last September which included a forecast of a cash burn of up to €10 billion ($10.9 billion) in 2024, and that was the beginning of the end for Tavares.
In the event, Stellantis’s operating profit margin in 2024 was 5.5%, down sharply from 2023’s 12.8%. Adjusted operating income was €8.6 billion ($9.4 billion), towards the bottom of the warning issued in September. Stellantis expects little improvement in 2025.
Sales in Europe fell 7.3% to about 2 million in 2024, in an overall market that rose 0.8%. according to ACEA. Market share was 15.2% behind the leader Volkswagen and its multi-brands at 26.3%.
“We are firmly focussed on gaining market share and improving financial performance as 2025 progresses,” acting CEO Elkann said in a statement last month.
Investment researcher Jefferies said Stellantis was looking for stabilization in 2025 rather than recovery, in a report headlined “Stellantis-just heaving-to for now”.
“Our positive bias comes from the conviction that Stellantis’s many self-inflicted problems are fixable while we expect new management, probably external, will be tasked to completely rethink what it should be in terms of scale, brands and technology content,” the report said.
And what about all those brands? In Europe the obvious weaklings are Lancia, Alfa Romeo, and DS.
Felipe Munoz, global analyst at JATO Dynamics had expected plenty of rationalization from the merger.
“Stellantis, like many other legacy carmakers, is in a tough situation. Honestly, when I heard about its creation 4 years ago, I thought that they would get rid of brands and focus on the strong ones. At the end, the goal of a merger is to join forces, save costs, and accelerate the transformation of the companies involved,” Munoz said in an email exchange.
“To manage (all those brands) requires not only a lot of resources but wisdom to position them. Although Stellantis might have the resources, over the last 4 years it has shown that it struggles to position each of its brands correctly. They have not been able to differentiate most of its brands. (Peugeot, Citroen and Fiat) were quite similar. They were both European focused with little complement between them,” Munoz said.
Stellantis decided to keep all the brands, without foreseeing the storm currently rocking the global industry, he said.
The European market is still about 25% smaller than it was before the Covid pandemic.
“Now, from all the brands, at least 10 are in dire need of fresh products. Two of them count on only one model. The positioning is not clear either: Opel is very similar to Peugeot. Fiat is very similar to Citroen. Lancia wants to enter the premium segment, where DS and Alfa Romeo are already struggling. Maserati hasn’t been able to find its identity and is stuck somewhere between the premium and luxury segments,” Munoz said.
Investment researcher Bernstein said Tavares tried to cut costs in North America while raising prices and model specifications to levels beyond the means of its typical customers. This is still being corrected. The lack of investment in the product range will take longer to fix.
“Europe too is not short of issues. Now that three months have passed since the ousting of Tavares, we look at the dysfunction that led to the disastrous second half 2024 results and look for the route back,” Bernstein said in a report.
HSBC Global Research expects some North American improvement, but recovery in Europe is less clear, where weakness poses longer-term questions. Berenberg Bank says Europe has recurring quality issues, and sales in January were down 16% in a market which fell about 3%.
JATO Dynamics’ Munoz said the European market is stagnating and manufacturers face problems meeting EU CO2 standards, a possible tariff crisis with the U.S., and increasing pressure from Chinese manufacturers in Europe and weakening sales in China.
“I see no option but the further consolidation of the industry and further collaboration with the Chinese makers,” Munoz said.
The next Stellantis CEO will have to fix the profit problem and decide what to do with all those brands. Selling some off them off might well meet willing buyers from China eager to raise their profile in Europe and avoid recently erected high EU tariffs.