Stellantis to Cut Production, Threatens to Axe Money-Losing Brands
Things are not going well for Stellantis, particularly in North America where declining sales, rising inventory and weak profit margins are starting to become a serious problem, not to mention the many recent changes in senior management. The world's fourth-largest automaker announced worse-than-expected results for the first half of 2024, sending its shares down as much as 10 percent.
CEO Carlos Tavares said on Thursday that steps are being taken to fix the situation, as reported by Reuters. More importantly, perhaps, he threatened to eliminate under-performing brands if that’s what it takes.
- Also: Stellantis Plans to Get Rid of Chrome on New Vehicles
- Also: Stellantis to Build New Midsize Pickup in the U.S.
"If they don't make money, we'll shut them down," Tavares told reporters. "We cannot afford to have brands that do not make money."
Remember, when Fiat-Chrysler (FCA) and Peugeot (PSA) merged in 2021 to form Stellantis, Tavares offered a reassuring stance for the short and medium terms, but warned that things could change significantly in the next decade. Basically, he promised each of the 14 brands funding for 10 years to do a core model strategy—10 years to prove they belong. It appears he’s already running out of patience.
According to some market analysts referenced by Reuters, Stellantis’ first move could be selling Maserati, then axing Lancia or DS given their marginal contribution to the company’s overall sales.
On this side of the Atlantic, Tavares and the U.S. team will work together this summer and try to come up with decisive actions to address operational challenges. CFO Natalie Knight talked about cutting production and reducing prices both in the U.S. and Canada this quarter.
"(That) is the market that needs the most work and where we are most concentrated when we look at the second half," she said. "One of the things that is important for us is to calibrate how the supply and demand meet."
Stellantis also aims to further reduce labour costs and logistics expenses in the second part of the year.
Ram and Jeep are the two biggest pieces for the automaker in North America, so they’re not going anywhere. On the flip side, Chrysler’s death would be a surprise to almost no one, as would Alfa Romeo exiting the continent.
Fiat? It has just made a return with the launch of the 500e electric hatch, so more time is needed to make a decision. Similarly, Stellantis will want to see how Dodge’s reinvented Charger fares in the market before determining the brand’s fate.