Stellantis is at a crossroads: leadership change has occurred just this month, mid a global auto industry transformation to electric. The automotive industry is witnessing a pivotal moment as Stellantis, the world’s fourth-largest automaker, navigates through significant challenges and opportunities.
The Beginnings of Stellantis
Stellantis is the leading automotive manufacturer publicly traded born from the merger in 2021 between Peugeot SA (PSA) and Fiat Chrysler Automobiles (FCA). The two groups have merged to become the fourth largest automotive manufacturer in the world and the second largest automotive manufacturer in Europe. In terms of revenue, Stellantis is the third biggest automotive manufacturer with a 2022 revenue of $189 billion US dollars. The group has 14 brands; 9 brands previously owned by FCA (Abarth, Alfa Romeo, Chrysler, Dodge, Fiat, Jeep, Lancia, Maserati and Ram) and 5 previously from PSA (Citroën, DS, Peugeot, Opel, Vauxhall).
Mergers of the Automobile Industry
This merger was not something anecdotic. The automotive inclination to collaborate and consolidate had been happening for decades. This is done for one sole reason: surviving. To survive, companies must grow and adapt themselves to their environment, and the automotive industry is today one of the most competitive in the world. Business professor, Merriam Webster defines growth as the proves of increasing size. This definition may be simple, but it is accurate, and is exactly what happens in the automotive industry, and the founding of Stellantis.
The merger has served as a strategic move to ensure survival and gain a competitive advantage in the rapidly evolving automotive and EV industries. By combining resources, expertise, and innovative capabilities, Stellantis is better equipped to thrive and compete effectively against other major industry players. This strategic operation allows Stellantis to leverage synergies, optimise its R&D efforts, and enhance its market presence, ultimately aiming to drive forward the development of cutting-edge elective vehicles and other technological advancements.
Automotive Industry
Over the last decade, the concentration of automotive actors had grown continuously, leading to the creation of extremely large companies who dominate the industry, such as Volkswagen, Toyota, General Motors and now, Stellantis. The incentives strengthen this tendency tur around mass production and innovation. By expanding their production facilities, these transnational groups can achieve economies of scale and scope, enabling them to invest heavily in innovative technologies and advanced equipment. In a market that is more concentrated than ever, mergers, alliances, or acquisitions seem to be one of the keys to survive and grow over time.
The Stellantis group has a continuous growth and places itself as a major actor in both the automotive industry and the Electric vehicles industry. While a huge part of the market is in Asia and more specifically in China, most of the Stellantis’ sales are in North America and in Europe. The Asian segment represents only around 2.5% of the global sales. This breakdown shows the weakness of the group in the biggest market of the world.
The Stellantis Way
Stellantis’ strategy revolves around leveraging synergies developed during the merger, particularly focusing on research and development (R&D) synergies. Additionally, there are serious growth prospect in the electric vehicle (EV) sector, driven by the growing emphasis on sustainability and environmental policies in Europe. Thus, the politics against the sale of new cars with petrol and diesel motors in Europe from 2035 represents a major concern for Stellantis and for every player in the so called, traditional automotive industry. Furthermore, this threat is particularly concerning for Stellantis due to their delayed initiation to the EV transition, especially notable for Fiat (FCA).
Electric Vehicle Strategy and the Public Response
Stellantis has positioned itself for a major transformation in the electric vehicle (EV) sector. Through its ambitious Dare Forward 2030 program, announced in March 2022, the company targets 100% low-emissions vehicle sales in Europe and 50% in the USA by 2030. To support this vision, Stellantis has committed a substantial 30 billion euro investment between 2021 and 2025, focused on vehicle electrification and software development. The company is already delivering on these promises, rolling out new hybrid and electric models including the Jeep Avenger and E-Peugeot 3008.
Public reception and feedback has been encouraging. At Fiat Monnet Automobiles in Lyon, Cyril highlights their latest offering: “The latest Fiat 500 is the latest electric vehicle that we have on offer. It’s got all the latest technology included, while still being a small comfort size for driving around in the city.”
He notes the broader industry shift toward electrification: “We have more and more electric cars on offer, and the same goes for other automobile companies, and I think people are slowly getting around to switching out their cars to eclectic versions. Of course, this transition is slow, as with anything I think, and of course, each city has different options for charging.”
The rental car market provides additional insight into consumer preferences. Gabriel, a representative from Avis’s Geneva Airport branch, observes strong demand for Stellantis’s electric models: “I think when people hire a car, they like to have something environmentally friendly, so our electric options are very popular. Of course, in this case, it is not them charging it, so it is easier for them.”
Leadership Crisis and Transition
Carlos Tavares, the architect behind Stellantis’s formation, abruptly resigned this week following a series of strategic missteps. While his departure was sudden, warning signs emerged as early as September 2023, with rumours of leadership changes amid deteriorating financial performance. Under his watch, the company suffered a 48% drop in profits in the first half of 2024 and an 18% decline in North American sales, eroding the board’s confidence despite his attempts to downplay the crisis.
The company’s challenges mirror broader industry struggles, as global automakers face declining demand while investing heavily in electric vehicle development and competing against rising Chinese manufacturers. For Stellantis specifically, poor inventory management in the United States forced price cuts that hurt flagship brands Jeep and RAM, while ineffective strategy in China led to continued market share losses. Additionally, aggressive cost-cutting measures, though temporarily beneficial, hampered team effectiveness and problem-solving capabilities.
John Elkann will serve as interim CEO with a temporary executive committee until a new Managing Director is appointed in the first half of 2025, reflecting the board’s urgency to stabilize the company during this turbulent period.
Looking Ahead
The merger of PSA and FCA into Stellantis stands as a testament to the transformative potential of strategic collaboration in the automotive sector. Beyond the numbers, it signifies a paradigm shift towards innovation, sustainability, and organisational synergy. As Stellantis continues to shape the future of mobility, its journey serves as a beacon for the industry, showcasing how a mega-merger can indeed propel a company to the forefront of innovation int eh EV industry and beyond.
Lascia un commento