Stellantis Shrugs Off Strike Costs, Stays Bullish Despite U.S. Share Drop

Stellantis shakes off the effects of the UAW strike that ended last weekend with relative ease as the company takes just a $795 million hit to pretax operating profits and a $3.2 billion reduction in revenues in the third quarter.

Third-quarter revenue rose 7% to $47.8 billion. Chief Financial Officer Natalie Knight says the company is the industry leader right now in adjusted operating income, adjusted operating income margin and industrial free cashflow.

The automaker, which owns and manages Peugeot, Citroen, Fiat, Jeep, Chrysler, Dodge, Ram, Maserati, Alfa Romeo, Ram and more also reaffirms a strong second half of 2023 for revenue and profit, though it won’t report profits until after the close of the calendar year. It reported record net profits of $12.1 billion for the first half of 2023, a 37% increase over last year.

"We are clearly on track," said Knight Tuesday. Stellantis shares gained 3.75% Tuesday.

Stellantis was the least affected by the UAW strike among Detroit automakers and has the greatest exposure to the European market.

Stellantis counts on the U.S. for about 50% of its operating earnings, compared with about 80% for Ford and General Motors, according to financial statements of all three companies.

Challenges in the U.S.

Stellantis fell into a sales slump in the third quarter, notes Cox Automotive. Deliveries were off 2% when the market was up 16%, prompting continued market share erosion. “Worse, Stellantis’ high-volume, money-making brands, Jeep and Ram, have been sliding in sales and market share,” says Cox.

Stellantis ramped up incentives in the third quarter. According to Cox, Ram had the highest incentives while Jeep had the biggest percentage increase in incentives from a year earlier. And, like other automakers, Stellantis’ growth in average transaction prices slowed.

Stellantis BEV Plans on Track

GM and Ford have announced some pauses and rollbacks of some of its investments and projects in battery-electric-vehicles to account for lagging consumer uptake and bloated inventory. Knight says Stellantis hasn’t followed suit, in part because its business in Europe necessitates that BEV investments stay on track.

The company has identified some $50 billion it is spending on BEV development and production between now and 2030. It also plans to realize $5 billion in revenues from software services and 40% of its sales in BEVs by the same year.

Knight, addressing both media and global investment-bank analysts, is also bullish on Stellantis’s strategy centered on its joint venture with Chinese BEV maker Leapmotor, which has been incorporated in the Netherlands and is focused on facilitating sales of Leapmotor’s vehicles outside of China, especially in Europe.

There is currently controversy between the EU and China over pricing of Chinese BEVs within the European trading bloc, with China accused of state subsidies giving BEV makers an unfair cost advantage there. But Knight says the JV is designed to have production of low-cost, affordably priced Leapmotor BEVs shifted to Europe if the regulatory environment changes.

Knight refers to Leapmotor at “Stellantis’s 15^th brand,” and the products coming to market are aimed at consumers “who are cost conscious but want the best technology in their products.”

Global BEV sales were up 37% versus Q3 2022 driven by the Jeep Avenger and growing commercial BEV vehicle sales in Europe led by the Citroën ë-Berlingo. In 2024, Stellantis’s Citroën unit will launch the ë C3, priced starting at €23,300 ($24,700) and with a range of almost 200 miles (320 km).

Stellantis lagged GM and Ford in early development of BEVs but is proving to be a fast follower. The automaker plans a sixth gigafactory globally, and the second in the U.S., in Kokomo, IN.