Stellantis Faces Earnings Decline Amid Operational Challenges

Milan – Stellantis CEO Carlos Tavares announced plans to address significant operational issues following a stark decline in the company’s first-half earnings. The automaker, formed from the merger of Fiat-Chrysler and PSA Peugeot in 2021, reported a 48% drop in net profits, totaling 5.6 billion euros ($6 billion), compared to 11 billion euros in the same period last year. Revenues also fell by 14%, reaching 85 billion euros, as the company grapples with lower sales and restructuring costs. Tavares acknowledged that the company’s performance did not meet expectations, attributing the downturn to both challenging market conditions and internal operational difficulties. He expressed optimism that the launch of 20 new vehicles this year could help improve profitability. Stellantis reported an adjusted operating income of 8.5 billion euros ($9.23 billion), a decrease of 5.7 billion euros from the previous year, with North America being a significant contributor to the decline. The CEO highlighted the current turmoil in the global auto industry, where consumer demand for affordable vehicles clashes with the need for increased capital investment in electric and gas-powered models. In North America, Tavares noted that the company had overestimated inventory levels, leading to corrective measures, including offering incentives to lower prices. However, he admitted that Stellantis's sticker prices remain higher than those of competitors. As a result of these challenges, Stellantis's U.S. shares fell over 10% in Thursday afternoon trading, marking a nearly 11.8% decline for the week. Tavares remains hopeful that inventory issues will be resolved in the coming months.