The president of Stellantis NV, John Elkann, recently told investors that 2025 would be a period of stabilization. For the besieged car manufacturer, it turns out to be anything but.
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Posted March 12, 2025 • 4 -minute reading
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(Bloomberg) – President of Stellantis NV, John Elkann, recently told investors that 2025 would be a period of stabilization. For the besieged car manufacturer, it turns out to be anything but.
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After US President Donald Trump imposed an import rate of 25% on the goods in Canada and Mexico last week, Elkann and the leaders of Ford Motor Co. and General Motors Co. pleaded for the help of Trump. The leaders of Stellantis even contacted the United Auto Workers Union to get help.
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While the prices were delayed until April 2, Trump threatened on Tuesday to increase steel and aluminum prices in Canada to 50%, by clicking on American actions, before the president returned. Such changes arise at a particularly vulnerable time for the manufacturer of Jeep Wranglers and Dodge Muscle Cars, who has seen the divisions drop by more than half in the past year.
The former managing director of the automaker, Carlos Tavares, increased prices while aggressively reducing costs, resulting in a 70% drop in net profit in 2024 while Ford has slightly beat estimates and GM posted record profits. The company, which is still looking for a new CEO, only provides for mediocre profitability this year, not to mention additional tariff costs.
« The whole automotive industry will obtain seriously contrary to prices, but for Stellantis, the stakes are much higher, » said Pierre-Olivier Essig, analyst of actions based in London at Air Capital.
Trained by the Five Chrysler fusion in 2021 and the French PSA group, Stellantis was intended to be a global juggernaut large enough to resist the rocky transition to electric vehicles. But under Tavares, the company has spent years moving production and jobs in countries at a lower cost, as part of a play to finance the development of electric vehicles. Elkann, the founding foundation of Fiat Agnelli, is now carrying out an expensive process to reverse most of these decisions, even if Trump makes new requests for American investments.
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Before the inauguration of Trump, Elkann met the president and then announced billions of dollars of new American investments, notably in reopening an Illinois factory which had been closed under tavares. The automaker also plans to hire around 1,000 people in the United States this year.
Some 45% of American sales in Stellantis are imported, which gives it considerable pricing exposure, although relatively less than others, including Volkswagen AG. Last week, S&P Global Ratings lowered BBB + Stellantis debt to BBB, two stages above junk food, warning that price reductions and tariff risks could limit the manufacturer’s capacity to extend sales and beneficiary margins this year.
« We do not assume that Stellantis will have to absorb the total cost of prices because we believe that the company, like the other car manufacturers, will use prices to go through the impact, and will possibly plan to move assembly to the United States, » said S&P.
In the basis of the basis of S&P, a price of 25% on Canadian and Mexican imports would force Stellantis to increase car prices from 6% to 8%, which means that American sales reduce around 5% to 7%.
American production battles
According to people close to the discussions, Trump of Trump, who was extended beyond the cars, came with a condition: car manufacturers should develop plans to further advance manufacturing in the United States.
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Stellantis has already made billions of new manufacturing commitments in the United States this year, and the company refused to comment on other investment plans. Its financial director said in December that Stellantis had more capacity in the United States which « will allow us to adjust us if and when » the prices are being set up.
The installation of Illinois closed in early 2023 and became a discord point during a subsequent UAW strike that year. Then, CEO Tavares agreed to reopen the installation, helping to resolve the strike, but then delayed the investment.
Stellantis now plans to make a new medium -sized van from 2027, bringing 1,500 people back to work.
Stellantis also undertook to build his new Dodge Durango SUV in a Detroit assembly plant and to invest in installations in Toledo, Ohio and Kokomo, Indiana.
Relations between Stellantis and the UAW were particularly tense under the direction of Tavares of the automaker, although Elkann and Antonio Filosa, the head of the Stellantis, America, have sought to overthrow the relationship. The White House consulted the UAW because it shapes the pricing policy, and the union applauded the president’s tariff movements.
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“Michigan, Toledo, Kokomo, Belvidere, they all have room for capacity expansion. Many take place at a capacity of third or half, « said Kevin Gotinsky, director of the UAW Stelllantis department, referring to the American assembly factories. « We have an interest in the commercial policies that take advantage of us and bring the work here. »
At the top of Gotinsky’s list is a truck plant in Warren, Michigan, where Tavares cut 1,100 jobs last fall. He also moved a production of the RAM 1500 pick-up in Stellantis to a factory in Saltillo, Mexico, where the company also makes heavy versions of the lucrative van.
The union postponed Stelllantis’ request to help him persuade Trump on prices last week because of his concerns concerning dismissed workers and underused plants in the United States, according to people familiar with the issue, who refused to be appointed because they were not allowed to speak publicly about private discussions.
Stellantis is counting on the drop in prices and aggressive marketing to improve sales this year. He also launches a multitude of new products, including the new Panda Fiat Grande in Europe and the RAM Changer, an electric truck with an on -board gas generator to facilitate the anxiety of the driver range. Stellantis could also benefit from a reduction in regulatory pressures in Europe, where the European Commission has proposed to soften the programs rules which were supposed to become more strict this year.
But the efforts of Stellantis so far have not increased its market share, according to Jefferies analyst, Philippe Houchois.
« Against now relatively skinny stocks, retail data points have so far shown more losses of sharing in the United States and Europe, » Houchois wrote in a note of March 2 to customers.
– With the help of Keith Naughton.
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