Stellantis Profitable in 2023, Downplays Merger Talk With Renault

Stellantis reports a 13% decline in profits in the second half of 2023, a result largely of the UAW strike last fall, and tells investors it expects 2024 to be a turbulent year as the industry contends with higher costs transitioning to electric vehicles as consumer demand for battery-electric vehicles slows.

The company, which owns and manages numerous brands including Fiat, Jeep, Dodge, Peugeot, Lancia, Ram and more, reports net profit of €7.7 billion ($8.3 billion) in the second half of 2023, down from €8.8 billion ($9.5 billion) in the same period a year earlier.

Profits for the full year rose 11% to €18.6 billion ($20 billion).

Challenges facing Stellantis and other automakers this year include slower EV adoption rates at a time when companies are making huge capital investments, as well as geopolitical uncertainties around Russia’s ongoing war on Ukraine and potential economic fallout in Europe.

Higher labor costs in the U.S. as a result of the new UAW contract will be at least partially offset by falling prices of raw materials.

Stellantis’ European revenues were flat in the second half of the year at €31.7 billion ($34.1 billion). South America had flat results at €8.4 billion ($9 billion), while the Middle East surged 71% to €5.9 billion ($6.3 billion) and China, India and the Pacific region’s second-half revenues slid by about one-third to €1.5 billion ($1.6 billion).

Amid the tumultuous, high-cost transition to electrified vehicles and a rapid incursion of Chinese EV makers into Europe and Mexico, the French government has been studying the benefits of Stellantis and Renault merging operations.

Italian news agency Il Messaggero reported earlier this month that the Macron government in France, which is Renault’s largest shareholder, is studying the merger of the two companies as a means of lowering costs and becoming more competitive in Europe against Chinese EV makers, which have garnered 10% of the market in just two years. The European Commission is currently reviewing complaints that China’s government is subsidizing its automakers in an unfair way that gives them a price advantage over European carmakers.

“We don’t have any projects in progress, we don’t have any discussions in progress,” Stellantis CEO Carlos Tavares says on a call with analysts and media.

Renault CEO Luca de Meo said Wednesday that a merger of the two companies would be complex. “On paper, Tesla could buy Volkswagen or Stellantis…it has the means. Why doesn’t it do it? Probably because it’s not that simple and perhaps not that interesting. A merger only succeeds if there is a will on both sides.”

A combination of the two companies would lower prices and make the new entity more competitive by lowering costs, and probably eliminating unprofitable businesses, but jobs also would be lost in the cost-cutting. That would be a hard pill for the French government to swallow.