Stellantis takes $2.7 billion hit in market shaken by Trump
The maker of Jeep SUVs and Fiat cars on Monday announced a surprise €2.3 billion ($2.7 billion) first-half net loss — analysts had expected a small profit — as the company tallies the costs of trade wars and scraps investments in electric and hydrogen vehicles to account for reduced demand. Trump has dialed back U.S. support for EVs since he returned to the White House.
The 52-year-old Italian is trying to 'kitchen sink' the first-half results 'to provide a low earnings base upon which to build,' Bloomberg Intelligence analyst Michael Dean said in a note.
The new CEO, in office for roughly a month, is responding to big changes in the auto market as well as the company's previous missteps. Trump's moves are raising costs and upending global supply chains, while Chinese manufacturers led by BYD Co. are pushing into Europe's stagnant car market. Stellantis' issues are gravest in the former profit center North America, where its shipments fell 25% in the second quarter after Filosa's predecessor Carlos Tavares angered dealers and unions with a series of painful cost cuts.
Stellantis flagged some €3.3 billion in pretax net charges it incurred in the first half — including €700 million linked to its decision to pull out of a joint hydrogen-vehicle venture with Michelin and Forvia SE. The manufacturer is shifting investments from electric to hybrid vehicles and also incurred impairments on certain Maserati platforms during the first half. Additional charges were tied to the widening of a Takata airbag recall in Europe and a restructuring of its headcount in the region.
The company also cited a roughly €300 million hit from U.S. tariffs as it lost production and responded to higher duties. The impact of duties will likely be 'significantly' bigger in the second half, Chief Financial Officer Doug Ostermann said on a call with analysts.
Stellantis shares fell as much as 3.8% in Milan before erasing the losses and trading up 0.4% as of 4:04 p.m. local time. The stock is down around 37% this year.
The company has been falling behind in the U.S. due to an aging lineup, model delays and pricing blunders. Filosa is now under pressure to overhaul the product offering in the country as local drivers gravitate toward hybrids. The Trump administration has made a series of moves that will hurt demand for battery-powered cars, such as eliminating penalties manufacturers faced for missing fuel-economy standards and phasing out federal tax credits of as much as $7,500 toward EV purchases.
But reversing its fortunes there may take some time as Tavares' stringent cost cuts — like swapping metal parts for plastic ones on rugged vehicles — alienated longtime customers and hurt Stellantis' stable of brands that also include Ram, Dodge and Chrysler.
Filosa, who lives in the U.S. and previously ran Jeep, also is contending with excess production capacity in Europe, where deliveries remain sluggish and some of its brands, notably luxury-car maker Maserati, are burning money. The company's global vehicle shipments fell 6% in the second quarter amid declines in North America and Europe.
Still, the introduction of key new products in Europe - for example the Fiat Grande Panda and the Citroën C3 Aircross — went well and the current year is set to be one of 'gradual and sustainable improvement,' Filosa said in an internal message to employees obtained by Bloomberg on Monday.
The company will reintroduce its financial guidance for the year when it releases more detailed first-half results on July 29, Ostermann said Monday. Stellantis said it disclosed the preliminary first-half figures to address differences between analyst forecasts and its performance in the period. It had pulled its guidance in April, citing U.S. tariff uncertainty.
Any strategy changes got held up by Stellantis' months-long CEO search after Tavares left in December. Chairman John Elkann eventually settled on Naples-born Filosa, a seasoned company insider who joined Fiat in 1999 and later rose through the ranks as a protégé of the late Fiat Chrysler boss Sergio Marchionne.
Torsoli writes for Bloomberg.
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