Multinational automaker Stellantis is considering eliminating unprofitable automotive brands, demonstrating its commitment to improving weak margins and curbing high inventory at its operations in the United States, Reuters reported.
Disappointing first-half earnings prompted Stellantis to target underperforming brands
Stellantis Chief Executive Carlos Tavares warned on Thursday that the company is willing to kill unprofitable brands after reporting worse-than-expected H1 2024 earnings results, which pushed its shares down as much as 10%.
“If they don’t make money, we’ll shut them down. We cannot afford to have brands that do not make money.”
Stellantis Chief Executive Carlos Tavares
Stellantis’ sales in the first half of the year totaled €84,504 million ($91 million), indicating a notable drop from €98,063 in the same period last year. In addition, its net income also dropped year-on-year from €10,923 million ($11 million) to only €5,624 million ($6 million) in H1 2024.
Stellantis also reported that its adjusted operating income (EBIT) dropped 40% to €8.463 billion ($9.17 billion) in H1 2024, falling below the €8.85 billion analysts expected in a Reuters poll. Its margin on adjusted EBIT also declined to just under 10%, falling behind its target of a double-digit margin for the full year.
Stellantis does not publish separate figures for its automotive brands, except Maserati, which reported an €82 million adjusted operating loss in the same period.
Major overhaul planned as Stellantis CEO eyes profits
After suffering from a huge decline in the first of the year, Stellantis is now taking measures to recover.
The company plans to fix its weak margins and high vehicle inventory in the US through various strategies, including dumping underperforming brands.
Stellantis currently has 14 automotive brands under its umbrella, including the following:
Several industry analysts suggest that Stellantis may offload Maserati due to its significant adjusted operating loss in the first half of the year. On the other hand, the future of other brands like Lancia and DS is uncertain as their sales contributions remain negligible.
Looking forward
Stellantis CEO Tavares remains under significant pressure to revitalize waning margins and sales as the company aims to roll out 20 new models this year.
As for cutting US inventory, the Stellantis boss shared that he would work hard throughout the summer with the team in the domestic market. He aims to determine viable approaches to improve the company’s operations on Tesla’s home turf.
“We consider that the job is done in Europe. The job is not done in the US and we are now going to take care of that work.”
Stellantis Chief Executive Carlos Tavares
Stellantis enjoyed major sales growth in the European electric vehicle market in the first four months of the year, even claiming to be leading the transition in key local markets.
The Stellantis boss’ recent remarks mirror the company’s desperation to make profits and remain competitive in the rapidly evolving market. In fact, the plans to ditch unprofitable brands signify a position change for CEO Tavares, who used to believe in these individual brands’ future since the 2021 merger.
