Stellantis CEO Says He Is Ready To Start Cutting Brands

Stellantis, the world’s fourth-largest automaker, says it is taking decisive action to tackle weak margins and high inventory levels in its U.S. operations. CEO Carlos Tavares announced that the company is prepared to eliminate underperforming brands from its extensive portfolio if they fail to generate profits. This marks a significant shift in strategy for Tavares, who previously maintained that all 14 brands under Stellantis, including Chrysler, Maserati, DS Automobiles, and Lancia, had a future.

“If they don’t make money, we’ll shut them down,” Tavares stated after Stellantis delivered disappointing first-half financial results. The company’s shares dropped by as much as 10% following the announcement. Tavares emphasized the importance of profitability, stating, “We cannot afford to have brands that do not make money.”

Stellantis, which recently added China’s Leapmotor to its lineup through a broad cooperation agreement, has not disclosed financial figures for individual brands except for Maserati. Maserati reported an adjusted operating loss of €82 million ($89 million) in the year’s first half. Some analysts speculate that Maserati could be sold, while other brands like Lancia or DS, which contribute minimally to the group’s overall sales, might face discontinuation.

Stellantis’ shares, listed in Milan, fell by as much as 12.5% on Thursday, hitting their lowest point since August 2023. This decline brings the company’s year-to-date loss to 22%, making it the worst performer among major European automakers.

Tavares is under pressure to improve margins and sales and reduce inventory in the U.S. Stellantis is betting on launching 20 new models, primarily electric vehicles (EVs), this year to boost profitability.

Recent poor results from global carmakers have heightened concerns about weakening sales in major markets like the U.S. Additionally, automakers are navigating an expensive transition to EVs and facing increased competition from more affordable Chinese brands. 

Tavares plans to work with his U.S. team throughout the summer to enhance performance and reduce 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.”

Stellantis has been profitable in the U.S. with high-margin Ram trucks and Jeep SUVs. However, the company’s recent weak margin has raised questions about its cost efficiency. Stellantis’ Chief Financial Officer Natalie Knight stated that the company is taking “decisive actions to address operational challenges” in North America, including reducing production and prices this quarter.

Stellantis reported a 40% drop in adjusted operating income (EBIT) to €8.463 billion ($9.17 billion) for the year’s first half, below analysts’ expectations. The company’s margin on adjusted EBIT fell to just below 10%, missing its double-digit target for the full year.