Tags: stellantis | manufacturing | ev
OPINION

Is Stellantis in Trouble? Will It Recover in the US Market?

Is Stellantis in Trouble? Will It Recover in the US Market?
Citroen brand CEO Thierry Koskas and Carlos Tavares, Chief Executive Officer of Stellantis, pose in front of a Citroen C5 Aircross concept car on media day at the 2024 Paris Auto Show in Paris, October 14, 2024. (Eliot Blondet/AP)

Lauren Fix By Monday, 14 October 2024 10:57 AM EDT Current | Bio | Archive

The spotlight is on Stellantis, and it seems like things are getting worse. Its third-quarter sales in the U.S. were a disaster, falling 20%. For the year, it's down 17%. And investors are heading for the exits.

The stock price dropped 12% last week and is down 40% so far this year. At the beginning of the year, the company’s market cap was $70 billion. Now it’s $36 billion, a $34 billion drop in value in only 10 months.

Bloomberg reports that its production in Italy has cratered, dropping 41% so far this year. It only made about 238,000 vehicles there so far in 2024, which is less than it made in 2020 when the COVID pandemic shut down its plants.

Last year, Stellantis was one of the most profitable full-line manufacturers with double-digit margins, and its CEO Carlos Tavares was hailed as one of the best leaders in the business.

But this year he’s managed to turn everyone against him: his dealers, his unions, his employees and even the Italian government. The board is also actively looking for a new CEO when his contract expires in 2026. It’s possible he won’t last that long. The board of directors may have to buy out his contract, if only to prove it’s upholding its fiduciary duty.

Jeep and Ram are their most valuable brands. So the fact that Stellantis stated it is going to double down on electric cars that are not selling, raises suspicion. Getting rid of all of the high-performance cars, which they are know for, is a foolish move.

There are no cars left, just SUVs and trucks. Removing the current Charger and Challenger was a mistake. Dodge could have sold the Challenger, on that platform, for another 10 years with competitive volume against the Mustang.

There is no more Camaro. Those cars were money makers. The profit per car when you have the same platform for 20 years is unbeatable. Sadly, the Stellantis CEO is pressured by government regulations and not understanding the U.S. market place. The results are the end of the Challenger, and Charger, sadly, is likely to soon follow. Stellantis needs a Lee Iacocca.

Fiat and Alfa Romeo are two other famous Stellantis brands, including the all-new, all-electric 2024 Fiat 500e and the Alfa Romeo Tonale. Nevertheless, Stellantis is also removing these performance models form the U.S. market.

To help cope with this downturn, Stellantis is apparently planning to drastically cut labor costs and is expecting a 25% reduction in logistics expenses for the second part of this year. Maserati may also not be too long for this world in the Stellantis portfolio.

The United Auto Wokers (UAW) put big pressure on Stellantis during the last strike. After they settled the contract, Stellantis decided to move some production to Mexico to save money. In reacrion, Stellantis just filed nine lawsuits against the union seeking to block any attempt to strike over commitments made in the 2023 contract.

As for Tavares, he has often said the truth about EVs and warned EU politicians about the idiocy of EU7 and EVs. Every new car that launches as an EV also becomes available in hybrid or ICE (gas) variants. He was pretty good at walking the fence and far less of as being "green.”

Stellantis is actually positioned to make faster business decisions than Volkswagen, Renault, Mercedes, and other CEOs. It's a shame they killed the HEMI, Hellcat, and Demon motors, but the Hurricane engine isn't awful, and Tavares’ downsizing decisions are less radical than those of the majority of other carmakers.

However, in the past few months, he has changed his tune. Tavares started making statements about doubling down on going green. All while other companies are moving to a mix of hybrid, plug-in hybrids and EVs. People are talking behind the scenes, and it’s clearly going badly after July and the summer sales numbers which were horrible.

Last week employees were offered early buyouts, which means more quality long-term talent will leave the company. A few I know personally.

Since CEO Tavares has taken the lead of Stellantis the departure of leaders has become a huge concern. Key U.S. personnel including Jim Morrison, Tim Kuniskis, a few other top talent that had decades of experience running a U.S. car company, are now gone. These actions scream a lack of awareness or just a lack of concern, and probably some arrogance, too.

There are almost no metrics that look good at the U.S. brands right now, and a wide spectrum that look bad. And that signals incompetence. Perhaps this is all due to the different European market not understanding the U.S. market. This scenario happened in the past when DaimlerChrysler had its own fiasco, where the Germans decided they knew everything, and/or the U.S. brands could be neglected. We all saw the results.

Stellantis is hoping new model launches will help the automaker in the second half of 2024. Right now, there are a total of 20 new vehicles planned across Stellantis’s vast stable of brands. The leaders that turned around Stellantis have now left the company, and we will all have to wait for future products to see what direction the manufacturer finally chooses. We will keep our eyes on the market and keep you posted.

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Lauren Fix, The Car Coach is a nationally recognized automotive expert, media guest, journalist, author, keynote speaker and television host. A trusted car expert, Lauren provides an insider’s perspective on a wide range of automotive topics and safety issues for both the auto industry and consumers. Her analysis is honest and straightforward.

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LaurenFix
The spotlight is on Stellantis, and it seems like things are getting worse. Its third-quarter sales in the U.S. were a disaster, falling 20%. For the year, it's down 17%. And investors are heading for the exits.
stellantis, manufacturing, ev
991
2024-57-14
Monday, 14 October 2024 10:57 AM
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