Chrysler Is the Golden Goose at Stellantis

They used to be called the Big Three. At one time General Motors, Ford and Chrysler were the three biggest car companies in the world. They made more cars, trucks and vans than anyone else. Not anymore. Today GM is No.5, Ford is No.8 and Chrysler is buried within Stellantis (No.4) along with Fiat, Peugeot and Citroen.

So today we call them the Detroit Three, not the Big Three. And yet, while they may not dominate the global auto industry like they once did, they’re still very powerful industrial corporations. But just counting how many vehicles they sell doesn’t tell the story of how they stack up against each other. A financial analysis of the Detroit Three tells a very different story.

To make a good apples-to-apples comparison, let’s just look at their North American operations, since the Chrysler Group within Stellantis only operates in North America.

And while the North American operations of the Detroit Three include Canada and Mexico, it’s really a reflection of how they’re doing in the United States, because the U.S. accounts for nearly 90% of North American car sales.

From a sales and revenue standpoint, GM is far bigger than Ford or the Chrysler Group. GM sold 2.9 million vehicles last year in North America, Ford sold 2.3 million and Chrysler sold 1.8 million.

GM also brought in the most revenue, $128 billion. Ford brought in $108 billion, and Chrysler took in $85 billion.

GM posted an EBIT (earnings before interest and taxes) profit of $12.9 billion, up an impressive 26% from the year before. Ford came in at $9.1 billion, up an equally good 24%. But, and here’s where it gets interesting, Chrysler made an EBIT profit of $13.9 billion.

Those numbers really tell a story. GM sold 1 million more cars than Chrysler and brought in $43 billion more in revenue. Ford sold 474,000 more vehicles than Chrysler and brought in $23 billion more in revenue. But Chrysler made $1 billion more in profit than GM and $4.8 billion more than Ford.

Their profit margins tell the same story. Ford earned an 8.4% profit margin in North America, GM 10.1% and Chrysler, 16.4%. Just to show you how good of a job Chrysler did, Tesla posted a global operating margin of 16.7%. So, Chrysler was just about as good as Tesla from a margin standpoint, and Tesla is considered the gold standard.

While the Chrysler group sells a lot of fullsize pickups and SUVs with very healthy profit margins, it’s in the same ballpark as GM and Ford when you look at the average amount of revenue it gets per vehicle sold. GM gets an average of $43,875 for every vehicle it sells in North America, Ford gets $46,564 and Chrysler gets about $45,943. So, Chrysler gets a bit more money per vehicle than GM, but not as much as Ford.

While Stellantis CEO Carlos Tavares deservedly gets rave reviews for brilliantly running the company, in North America the credit really goes to Mark Stewart, who runs the company’s operations in the region. The Alabama native has a solid automotive background, but Fiat Chrysler hired him away from Amazon where he was vice president of operations. When Fiat Chrysler merged with Peugeot to form Stellantis, and Tavares took over as CEO of Stellantis, he left Stewart in charge of North America because Stewart clearly knows operations.

Stewart claims Chrysler’s breakeven point is below 30%, which is a staggering revelation. The usual rule-of-thumb in the industry is that automakers have a break-even point of 80%. So, a 30% break-even point blows everyone away. That means the Chrysler group could lose 70% of its sales and still be profitable. And that, ladies and gentlemen, is what you call operational excellence.

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Stellantis is performing brilliantly, probably far better than what everyone in the industry thought it would do. But make no mistake: Chrysler is the Golden Goose that makes Stellantis look as good as it does.

John McElroy (pictured, above left) is the President of Blue Sky Productions, which produces “Autoline Daily” and “Autoline After Hours” on www.Autoline.tv and the Autoline Network on YouTube. The podcast “The Industry” is available on most podcast platforms.