Stellantis stumbles financially in H1 and faces delivery problems

Tony Verhelle

August 1, 2024

Stellantis Group is facing some problems in the first half of the year. In Europe it has delivery problems with its new small EV Citroën ë-C3 (pictured), in the States the whole cost structure has to be revised /Stellantis

Last week, the Stellantis Group published its results for the first half of 2024, and they weren’t good. The net benefit for H1, € 5.6 billion, decreased by 48% compared to the record-breaking performance last year. Meanwhile, the manufacturer is confronted with delivery problems for its new, long-awaited enlargement of its electric portfolio.

Turnover for H1 has fallen 14% to € 85 billion, and sales and benefits are lower than analysts expected. “Stellantis faces a very heckled period,” commented CEO Carlos Tavares, but he thinks the situation will improve in the second half of the year.

The operating margin of the group remained at 10% of general turnover, 4.4% less than last year but still in a very good average for car companies. Tavares says this is due to “a serious reduction in costs of components, personnel, and logistics”.

Aggressive competition

Sales have decreased in Europe (-6%) and, more noticeably, in the U.S. (-18%). “The group has also been confronted with a very aggressive pricing competition, mostly so from the Chinese manufacturers,” indicated Natalie Knight, Stellantis CFO.

That’s why Stellantis has made a deal with its new Chinese partner, Leapmotor. The first cars will arrive soon in Europe and be sold via the Stellantis networks. The U.S. market will be the first priority in the second half of this year: Stellantis wants to readjust tariffs and rebate schemes and slow down production to get rid of oversized stocks.

Delivery delays

Stellantis also struggles with delivery delays. Consumer organizations like TestAankoop/TestAchats are even considering suing the manufacturer for not delivering on the promised date. The delivery of the very interestingly priced new Citroën ë-C3 EV has already been postponed several times, creating a waiting list of over 30,000 units.

It was due to begin at the end of June, but now it will be in September or later. Stellantis apparently has problems with the final tuning and quality control of the car’s software logistics.

Also, the delivery of the new Peugeot e-3008, another interesting addition to the EV portfolio, is faltering. Initially, deliveries had to start in February, but they were delayed until March at the earliest in France and June in most other European countries.

The boss reacts

Stellantis is taking steps to fix weak margins and high inventory at its U.S. operations and will not hesitate to axe underperforming brands in its sprawling portfolio, its chief executive Carlos Tavares said on Thursday.
The warning for lossmaking brands is a turnaround for Tavares, who has maintained since Stellantis was created in 2021 from the merger of Italian-American automaker Fiat Chrysler and France’s PSA that all of its 14 brands.
After agreeing to broad cooperation with the group, the automaker now considers China’s Leapmotor its 15th brand. Stellantis does not release figures for individual brands, except for Maserati, which reported an 82 million euro adjusted operating loss in the first half of this year.
Some analysts say Maserati could possibly be a target for a sale by Stellantis, while others say it will become part of Ferrari.
Other brands, such as Lancia or DS, might also be at risk of being scrapped, given their marginal contribution to the group’s overall sales. Of course, the Lancia brand has just recently been revived, and it would be very painful to axe it just a few months after its revival.

Problem child U.S.

Recent poor results from global carmakers have heightened worries about a weakening outlook for sales across major markets such as the U.S., whilst they also juggle an expensive transition to electric vehicles and growing competition from cheaper Chinese rivals.
Tavares said he would work through the summer with his U.S. team on improving performance and cutting inventory. “We consider that the job is done in Europe,” he said. “The job is not done in the U.S., and we are now going to take care of that work.”
The high-margin RAM pickup trucks and Jeeps that Stellantis sells to U.S. consumers have driven its profits, but the company’s weak margin posted on Thursday “raises questions over Stellantis’ cost efficiency reputation,” Bernstein analysts wrote in a client note.

 

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