By Giulio Piovaccari, Nora Eckert and Gilles Guillaume
MILAN/DETROIT/PARIS, Dec 11 (Reuters) – New Stellantis CEO Antonio Filosa is prioritising vehicle sales growth over profits including resorting to lower-margin fleet sales and investing in affordable models to recapture market share in North America and Europe and get the world’s No. 4 automaker back on track, four sources familiar with the matter told Reuters.
Filosa, who took over in June, has launched what one source described as an “emergency room” operation to fix the mess left by his predecessor Carlos Tavares – who sought high margins through a combination of cost-cutting and price hikes that sparked a customer exodus.
Tavares was forced out late last year as Stellantis’ 2024 sales plunged 15% in the U.S. – the automaker’s main profit driver – while industrywide sales rose 2.2%, leaving dealers choking on stale inventory.
Filosa’s immediate aim is to deliver sales and revenues this year above low analyst expectations – the best of which indicate flat results versus 2024 – the same source said.
Early data suggests his strategy is beginning to work, as Stellantis’ sales rose 6% in North America in the third quarter, the first increase in eight quarters.
Details of Filosa’s short-term sales strategy and longer-term brand viability, reported here for the first time, come at a time when the automaker is fighting to regain lost market share.
The plans are aimed at restoring credibility with customers, investors and dealers while also keeping car factories running.
Reuters spoke to a total of six sources – two company insiders, two outsiders familiar with the matter and two representatives at major Stellantis shareholders – who spoke on the condition of anonymity as they were not authorized to discuss the matter publicly.
Stellantis’ strategy is rolling out at a time when the auto industry is adapting to U.S. tariffs, while struggling with the expensive transition to electric cars and aggressive Chinese competition.
Under Filosa “Stellantis is accelerating actions… to correct past strategic and operational decisions,” a company spokesman said.
The plan has the backing of major investors – the Agnelli family’s Exor, the Peugeot family and the French government -, three sources said.
Filosa’s tactics include resorting to U.S. fleet sales – lower-margin sales to rental companies, corporations and government agencies that automakers have historically used to offload inventory and pad sales figures, an industry source said, while Stellantis is also investing in the profitable Jeep and Ram models customers want.
Filosa is also working on a longer-term problem his predecessor left unresolved: figuring out which of Stellantis’ sprawling collection of 14 brands – also including Fiat, Peugeot, Citroen and Maserati – have a viable future, the first source said.
The company will also drop ambitious EV sales targets as Filosa makes the U.S. market his top priority, unlike Tavares, who went in the “opposite direction”, a source inside Stellantis said.
“Filosa absolutely understands what North America brings to the company,” said Sam Fiorani, Vice President at research firm AutoForecast Solutions.
BACK TO BASICS WITH A FOCUS ON POPULAR JEEP BRANDS AND AFFORDABILITY
Formed in early 2021 through the merger of Fiat Chrysler and France’s Peugeot maker PSA, Stellantis had bold ambitions to dominate future automotive technology as the world went electric.
But the automaker slashed costs and cut popular models like the Jeep Cherokee in the U.S. market to provide the double-digit margins former CEO Tavares promised Stellantis shareholders.
Stellantis priced its vehicles too high for customers and allowed rivals like Ford’s Bronco to eat into the Jeep brand’s market share.
The company’s U.S. market share dropped below 8% so far this year – its lowest on record for Stellantis, and Fiat Chrysler before it, according to car-shopping firm Edmunds – from 12.5% in 2020.
Under Filosa, the automaker has ditched direct investments in autonomous driving, Reuters has reported, and hydrogen-powered vehicles in a back-to-basics approach.
That also includes scrapping a key Tavares pledge that by 2030 100% of Stellantis’ European sales and 50% of its U.S. sales will be EVs.
The group has already re-introduced popular models like the Cherokee and the powerful ‘Hemi’ eight-cylinder gasoline engine in the U.S. market. More affordable models are planned to recapture share lost to rivals offering competitive entry-level vehicles.
Filosa said this month Stellantis’ sequence of product launches will bring sales growth that is “highly sustainable and progressively better quarter by quarter.”
“They’ve made a bunch of missteps in the past few years,” AutoForecast’s Fiorani said. “They need to rebuild the lineup… revive Dodge or somebody with a product that comes in under $30,000.”
A company source said Stellantis is confident it can 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 is feasible.
“That is a credible target for North America, where the group has encountered challenges,” Santino said, “but where its overall structure has basically remained the same.”
Filosa is reshaping Stellantis’ leadership, promoting trusted Italian and Brazilian managers from his time at FCA and Stellantis in Latin America. He is also hiring managers, engineers and tech experts to beef up ranks depleted under Tavares, two sources said.
SACRIFICING MARGINS
Corporate fleet sales, discouraged under Tavares, are being used to rebuild Stellantis’ volumes and keep plants running, the industry source said.
While fleet margins are lower than for retail sales, they help maintain visibility and prop up production if “done well,” AutoForecast’s Fiorani said.
“If nobody’s driving 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 that 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 they have been making.”
Filosa is ready to sacrifice short-term margins while investing in better products to prove 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.
Major Stellantis investors know real fixes will take years and are willing not to press Filosa on profitability, for now, three sources said, including both shareholder sources.
Filosa in October said a 6%-8% margin on adjusted operating income (AOI) was a “reasonable target for the mid-long term”.
Stellantis’ adjusted operating income margin is expected to hit low single-digits this year. Most analysts do not expect anything above 5% in 2027 – versus around 13% in 2022 and 2023.
But shareholder patience may run thin if profit margins do not tick up soon after sales rise. A source close to a major investor said while boosting sales was a “good thing, you also need margins to fund future investments.”
“ONE PLUS ONE DOES NOT EQUAL TWO”
Even before Stellantis’ creation, Tavares, then CEO of PSA, warned the auto industry was entering a “Darwinian” period where only the most agile brands would survive.
But though as Stellantis CEO he repeated his Darwinian refrain, Tavares never touched any of the automaker’s 14 brands.
Unlike the U.S., where Stellantis’ brands have different customers but share the same dealers, in Europe the merger of FCA and PSA brought together overlapping brands, which makes regaining lost market share there much harder, Oliver Wyman’s Santino said.
“That’s a tougher 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.
So Filosa is assessing all 14 brand’s long-term viability, a source familiar with the matter said.
His options could include axing some brands, especially overlapping European ones.
The next few months will be critical.
Strong year-end U.S. sales could buy Filosa time to deliver a long-term strategy and reassure investors Stellantis is not in structural decline.
“Are they where they need to be? No, not even close,” Criswell Automotive’s Criswell said. “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)
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