It was the year 2020 when Stellantis was presented in society. From the union between FCA and the PSA Group, the largest automobile conglomerate in the world was born, with 14 brands under its umbrella. A giant that has added Leapmotor to its portfolio, as it will market Chinese electric cars outside its country of origin.
To carry out the project, Carlos Tavares has always been clear that the formula involved a brutal cost reduction. From his first days he wanted to make his intentions clear: brands that were not profitable would have to close.
One of those brands that is on the tightrope is Maserati. The Italian company cannot find the path to profitability and in recent months rumors of all kinds have gained strength. There has been talk of closing the company outright but also of a possible sale.
The Italian is not the only company whose future has been questioned. DS and Lancia are also at the center of the hurricane, which has forced Carlos Tavares to go to public media to deny any rumors. But in addition to those already mentioned, the group’s American manufacturers are not going through their best moment either, which has increased pressure on the decisions made in the company.
The Volkswagen way?
A few days ago, Carlos Tavares assured that if they had made the decisions they have been making until now it was because they did not want to “follow the path of Volkswagen”, in clear reference to the economic difficulties that the German group is feeling firsthand. .
Under that premise, in recent years we have seen how Stellantis has applied a hard cost reduction that has gone through all kinds of strategies. The most obvious is the number of vehicles that are mounted on the same platform. For example, we have the new Peugeot e-208, Lancia Ypsilon or the Opel Corsa e mounted on the same platform (CMP) and hard points of the body. This makes them, almost, the same car with a different shape. The same thing happens to the Peugeot 2008, Jeep Avenger, Alfa Romeo Junior or the Abarth 600e, which repeat the strategy.
This has allowed Stellantis to have an enviable profit margin. In 2023 it already announced figures that were the envy of the industry. Its profit margin stood at 12.8% and sales volumes increased by 7%. But these figures already seem like a thing of the past. “We have to be Chinese ourselves,” Tavares said a few weeks ago to Automotive News.
In July, the figures reported in the first half of 2024 were much less optimistic. Net profit was 48% lower that in the first half of 2023 and the profit margin remained at 10%. Although they are good figures, the dynamics are not encouraging, with the United States focusing all eyes.
In the PowerArt podcast they already explained that part of the good numbers in last year’s sales figures in the United States were due to a huge number of self-registrations that are now in warehouses looking for buyers. As of June 2024, Stellantis had 1.4 million unsold cars worldwide.
But it is in North America where the automobile conglomerate has had the most problems. The enormous number of cars that were accumulated in their dealerships can only be put on the market with great discounts in what local companies define as a movement that degrades their brands.
There, the company has had to face massive layoffs that have reduced production and has faced governments such as the Canadian one, which pressured it to abandon the construction of a local plant if it was not given more subsidies.
Movements that also coincide with a slowdown in the market, which has forced the automotive group to reduce its forecasts for vehicles produced at the end of the year. The company itself has announced that it plans reduce by 200,000 units the final number of vehicles produced in 2024 to reduce stock and stop its bleeding into sales of cars that are collecting dust waiting for buyers. To this must be added a new modification in the expected operating margin, now standing at 5.5%, instead of the expected 7%.
The situation has called into question Carlos Tavares’ role in the company. The economic media assures that the conglomerate is looking for a new CEO for 2026, the year in which Tavares’ contract ends. At the moment, Tavares himself is among the candidates but Bloomberg He claims that the US results are tarnishing his image within the company.
An image that does not improve among the employees themselves either. The company has long used all possible formulas to reduce its workforce or carry out projects at the lowest possible cost. Along the way, it is manufacturing its cheaper cars in Morocco, taking advantage of the trade agreement the country has with the European Union.
In Italy, it has put on the table the possibility of assembling its Chinese Leapmotor cars in one of the country’s emblematic plants, until now run by Fiat. There, Stellantis maintains a open battle with the Government that is leaving chapters of all kinds, from the prohibition of selling the Alfa Romeo Junior with the Milano name or removing the Italian flag from the Fiat Topolino to the threat of dismissal of 2,000 workers.
And the practices, according to Bloombergare so aggressive that the company’s own employees constantly receive mass emails to sign up for job search companies. “You receive an email, then you receive another email, then another. You can receive multiple phone calls if you persist in wanting to stay at the company. I call this harassment, and it is leading to a massive loss of skills,” said Laurent Oechsel, representative of Stellantis union delegate of CFE-CGC to Bloomberg.
Photo | Stellantis
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