By Giulio Piovaccari, Nora Eckert and Gilles Guillaume
MILAN/DETROIT/PARIS, Dec 11 (Reuters) – Stellantis’ new CEO Antonio Filosa is prioritizing vehicle sales growth over profits, including resorting to low-margin fleet sales and investing in affordable models to regain market share in North America and Europe and put the world’s fourth-largest automaker back on track, four sources familiar with the matter told Reuters.
Filosa, who took office in June, launched what one source described as an “emergency room” operation to clean up the mess left by his predecessor Carlos Tavares – who sought high margins through a combination of cost cuts and price hikes that triggered an exodus of customers.
Tavares was forced to step down late last year as Stellantis’ 2024 sales plunged 15% in the United States – the automaker’s main profit driver – while industry-wide sales rose 2.2%, leaving dealers choking on expired inventory.
Filosa’s immediate goal is to generate sales and revenues “this year above analysts’ low expectations – the best of which indicate stable results compared to 2024”, said the same source.
Early data suggests its strategy is starting to work, as Stellantis sales rose 6% in North America in the third quarter, the first increase in eight quarters.
The details of Filosa’s near-term business strategy and brand viability, reported here for the first time, come at a time when the automaker is fighting to “regain lost market share.”
These plans aim to restore credibility with customers, investors and dealers while allowing auto factories to continue operating.
Reuters spoke to a total of six sources – two company insiders, two outsiders familiar with the matter and two representatives of Stellantis’ major shareholders – who spoke on condition of anonymity because they were not authorized to discuss the matter publicly.
Stellantis’ strategy is unfolding at a time when the auto industry is adjusting to U.S. tariffs, while facing a costly transition to electric cars and aggressive Chinese competition.
Under Filosa, “Stellantis is accelerating actions … to correct past strategic and operational decisions,” a company spokesperson said.
This project benefits from the support of major investors – Exor of the Agnelli family, the Peugeot family and the French government -, indicated three sources.
Filosa’s tactics include relying on U.S. fleet sales – low-margin sales to rental companies, corporations and government agencies that automakers have historically used to unload inventory and improve sales figures, an industry source said, while Stellantis is also investing in the profitable Jeep and Ram models that customers want.
Filosa is also working on a longer-term problem that his predecessor did not resolve: determining which of Stellantis’ 14 brands – including Fiat, Peugeot, Citroen and “Maserati” – have a viable future, the first source said.
The company will also abandon its ambitious electric vehicle sales targets as Filosa makes the US market its top priority, unlike Tavares, who has gone in the “opposite direction”, a source within Stellantis said.
“Filosa fully understands what North America brings to the business,” said Sam Fiorani, vice president of research firm AutoForecast Solutions.
BACK TO BASICS WITH A FOCUS ON POPULAR JEEP BRANDS AND AFFORDABILITY
Created in early 2021 by the merger of Fiat Chrysler and French manufacturer Peugeot PSA, Stellantis had a bold ambition to dominate future automotive technology as the world went electric.
But the automaker cut costs and removed popular models like the Jeep Cherokee in the U.S. market to deliver the double-digit margins that former CEO Tavares promised Stellantis shareholders.
Stellantis priced its vehicles too high and allowed competitors like Ford’s Bronco to eat away at the Jeep brand’s market share.
The company’s U.S. market share has fallen below 8% so far this year – its lowest level ever for Stellantis, and Fiat Chrysler before it, according to car-buying company Edmunds – compared to 12.5% in 2020.
Under Filosa, the automaker abandoned direct investments in autonomous driving, Reuters reported, and in hydrogen vehicles as part of a back-to-basics approach.
It also involves abandoning a key commitment by Tavares that by 2030, 100% of Stellantis’ sales in Europe and 50% of its sales in the United States will be electric vehicles.
The group has already reintroduced popular models like the Cherokee and the powerful eight-cylinder “Hemi” gasoline engine to the American market. More affordable models are planned to recover the share lost to competitors offering competitive entry-level vehicles.
Filosa said this month that Stellantis’ sequence of product launches would result in “highly sustainable and progressively better” sales growth quarter over quarter.
“They’ve made a lot of missteps over the last few years,” said AutoForecast’s Fiorani. “They need to rebuild the line…relaunch Dodge or someone with a product that costs less than $30,000.”
A company source said Stellantis was confident it could regain lost U.S. market share, but did not provide specific targets.
Marco Santino, a partner at consultancy Oliver Wyman, said restoring Stellantis’ U.S. market share to 2021 levels was achievable.
“This is a credible goal for North America, where the group has faced challenges,” Santino said, “but where its overall structure has remained fundamentally the same.”
Filosa is reshaping Stellantis’ management, promoting trusted Italian and Brazilian managers from his time at FCA and Stellantis in Latin America. He is also recruiting managers, engineers and technology experts to bolster the depleted ranks under Tavares, two sources said.
SACRIFICING MARGINS
Corporate fleet sales, discouraged under Tavares, are being used to replenish Stellantis’ volumes and keep factories running, the industry source said.
Even though fleet margins are lower than retail, they help maintain visibility and support production if “done right,” AutoForecast’s Fiorani said.
“If no one drives a particular model, retail buyers won’t know it exists without expensive advertising,” he said, meaning that if consumers see a car on the road or drive it as part of a rental fleet, they are more likely to take a closer look at it.
U.S. dealer Harry Criswell, president of Criswell Automotive which operates 12 dealerships in Virginia and Maryland, said Stellantis is listening more to commercial and fleet dealers.
“They want to sell cars,” Criswell said. “They want to make…much better quality cars than what they’ve been making so far.”
Filosa is willing to sacrifice short-term margins while investing in better products to prove that Stellantis can still build popular cars, three of the sources said.
In October, Stellantis announced a $13 billion investment in the U.S. market to boost sales and offset tariffs.
Stellantis’ key investors know that real solutions will take years and are prepared not to pressure Filosa on profitability, for now, said three sources, including the two shareholder sources.
Filosa said in October that a 6% to 8% adjusted operating profit (AOI) margin was a “reasonable mid- to long-term target.”
Stellantis’ adjusted operating margin is expected to reach the 10% mark this year. Most analysts do not expect an increase of more than 5% in 2027, compared to around 13% in 2022 and 2023.
But shareholders’ patience could wear thin if profit margins don’t improve soon after sales rise. A source close to a major investor said that while increasing sales was a “good thing, you also need margins to finance future investments”.
“ONE PLUS ONE DOES NOT MAKE TWO”
Even before the creation of Stellantis, Tavares, then CEO of PSA, had warned that the automobile industry was entering a “Darwinian” period where only the most agile brands would survive.
But even though, as CEO of Stellantis, he repeated his Darwinian refrain, Tavares never touched any of the automaker’s 14 brands.
Unlike in the United States, where Stellantis’ brands have different customers but share the same dealers, in Europe the merger of FCA and PSA brought together overlapping brands, making it much harder to regain lost market share there, said Oliver Wyman’s Santino.
“This is a more ambitious goal for Europe,” he said. “In this case, one plus one does not equal two.”
Brands like Peugeot and Opel compete in similar product segments, while premium brands DS and Lancia have minimal market share.
Filosa is therefore evaluating the long-term viability of the 14 brands, indicated a source close to the matter.
Its options could include removing some brands, including overlapping European ones.
The next few months will be critical.
Strong sales in the United States at the end of the year could give Filosa time to implement a long-term strategy and reassure investors. Stellantis is not in structural decline.
“Are they where they need to be? No, not even close,” said Criswell of Criswell Automotive. “But I think they’ve made remarkable progress in a short period of time.”
(Reporting by Giulio Piovaccari in Milan, Nora Eckert in Detroit and Gilles Guillaume in Paris; additional reporting by Alessandro Parodi in Paris; writing by Giulio Piovaccari; editing by Nick Carey and Anna Driver)
