Stellantis Stumbles: A Deep Dive into Sales Crisis and Market Shifts

Summary:

Stellantis’ Sales Decline

Stellantis, a trans-Atlantic carmaker, reported a significant decline in U.S. sales for the third quarter of 2024. The company sold 305,294 vehicles from July through September, marking a 19.8% decrease from the same period in 2023 and an 11.5% drop from the previous quarter. This decline was anticipated, as Stellantis was expected to be the worst performer among major automakers during this period. Industry forecasters like Cox Automotive had projected a sales decline of approximately 21% for Stellantis.

Market Share and Inventory Adjustments

Despite the sales decline, Stellantis reported a slight increase in market share from 7.2% to 8% during the third quarter. The company also achieved an 11.6% reduction in its U.S. vehicle inventory. Stellantis is taking measures to boost sales and prepare its dealer network for the 2025 models, as stated by Matt Thompson, the head of U.S. retail sales.

Brand Performance

All Stellantis brands, except for Fiat, experienced sales declines in the third quarter. Chrysler and Dodge saw reductions of more than 40%, while the Ram truck brand fell by approximately 19%, and Jeep’s sales decreased by about 6% year over year.

Challenges and Strategic Adjustments

Stellantis’ third-quarter sales issues are part of a broader set of challenges, including a recent cut in its 2024 profit margin forecast and a recall involving popular plug-in hybrid electric Jeep models due to fire risks. The company’s shares on the New York Stock Exchange have dropped by 41% this year, hitting a new 52-week low.

CEO Carlos Tavares has acknowledged “arrogant” mistakes in the company’s U.S. operations, which have led to sales declines and bloated inventories. He identified three main issues: slow inventory sell-down, manufacturing problems at two plants, and a lack of market sophistication. Since its formation through a merger in January 2021, Stellantis has focused on profit-driven strategies, prioritizing profits and vehicle pricing over market share, which has drawn criticism from the United Auto Workers union and U.S. franchised dealers.

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Next Steps:

1. **Monitor Stellantis’ Strategic Adjustments:** Keep an eye on how Stellantis addresses its operational challenges and implements its strategies to boost sales and market share.

2. **Evaluate Industry Trends:** Analyze broader industry trends and forecasts to understand how Stellantis’ performance compares with competitors and the overall market.

3. **Assess Impact on Stakeholders:** Consider the implications of Stellantis’ strategies on its stakeholders, including employees, dealers, and investors, to gauge potential responses and adjustments.

Bella Jin

co-Founder of Pongo