There’s a brief period after major corporations like Stellantis report on their finances and provide forecasts for the rest of the year when investors feel confident about the future of their investments, or at least know the worst for a little while.
That was then; now we are in President Trump tariff turmoil territory and a key factor for valuing a huge corporation trading internationally has been undermined. If you don’t know the prices you can charge, your control over a key element has disappeared and your power to predict profitability will be destroyed.
That’s why Stellantis, after reporting first quarter sales fell 14% to €35.8 billion compared with the same period last year, said it would not make any predictions about its profits for the year. Stellantis reports profits every six months, not quarterly.
Stellantis wasn’t alone. Mercedes withdrew its profit guidance for the year, as did Geely of China-owned Volvo Cars. Volkswagen reported first quarter earnings dropped 40% in the first quarter compared with the same period last year to €3.1 billion and its overall profit margin slid to 3.7% from 6%. VW said its profits were hit by uncertainties over the Trump tariffs, and profits for the year would be at the lower end of its 5.5 to 6.5% target range. VW said any possible fallout from the Trump tariffs was not included in the forecast. BMW has yet to report its first quarter finances.
Stellantis is currently leaderless, in financial difficulties and under great pressure to make some radical changes. CEO Carlos Tavares quit in December. A new leader is expected to be appointed by the end of next month.
Stellantis’s operating profit margin in 2024 was 5.5%, down sharply from 2023’s 12.8%. Stellantis had said before the Trump tariffs that it 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%.
Tavares orchestrated the merger between Fiat Chrysler and France’s Groupe PSA in 2021, bringing together 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 are in the U.S. Storied Italian sportscar maker Maserati sits atop of the list.
Analysts say there is much scope to remove brands and cut headcount.
“The company’s outdated product portfolio has been a persistent issue, forcing it into an aggressive product launch cycle with 20 new models set for release. While this move is necessary to regain competitiveness, it carries significant risks, including potential quality concerns and production delays,” said Orwa Mohamad, analyst at investment researcher Third Bridge.
Stellantis’s European operation is a weak-looking target for new Chinese competition.
“Stellantis faces a significant threat from Chinese EV manufacturers in Europe, even with the recently imposed tariffs aimed at protecting local automakers. Chinese brands have rapidly closed the gap in product quality, technology and cost efficiency, making them highly competitive in the mass-market segments where Stellantis operates,” Mohamad said.
Other analysts agree that Stellantis needs time to stabilize. In Europe the most threatened brands are Lancia, Alfa Romeo and DS. Citroen. Peugeot, Fiat Opel and Vauxhall are fighting over the same customers. At the time of the merger this wasn’t seen as a problem. Since then the overall market has shrunk, while competition has ramped up as Chinese manufacturers raised their game. Rationalizatiion seems inevitable.
Investment researcher Bernstein, in a report which talked about “some positives amid great uncertainties” in the first quarter said Stellantis is adjusting production and looking to improve sourcing to mitigate tariff impacts. Bernstein said a couple of positive surprises in the quarter included the average selling price of vehicles in the U.S. at €44,300 ($50,100), 1.0% better than expected, while in Europe it was €23,800 ($26,900), 6.1% above consensus.
Third Bridge’s Mohamad said Stellantis still had inventory and brand positioning problems in the U.S.
“With Ford and other rivals doubling down on their SUV and truck lineups, Stellantis will need to take bold steps in marketing and personalization to stay relevant,” he said.
“Looking ahead, Stellantis faces a “crunch point” over the next six to 12 months, requiring significant strategic adjustments. Cost-cutting measures, better alignment of production with demand, and improved software and electrification strategies will be crucial,” Mohamad said.
Experts wonder how long the tariff turmoil will last.
President Trump aims to strike 90 trade deals during a 90-day pause on his reciprocal tariffs announced earlier in April. His administration has repeatedly said it was negotiating bilateral trade deals with dozens of countries, according to Reuters.
Trump’s aggressive trade stance has cascaded through the global economy since his return to office in January, and the 90-day pause was unveiled after fears of recession and inflation sent financial markets into a tailspin, Reuters said in a report from Washington.
