Could Stellantis abandon one or more of its 14 automotive brands? In light of the automaker’s weak second-quarter earnings, that is a distinct possibility, warned CEO Carlos Tavares. But which of those marques are the most endangered? Headlight.News takes a closer look and a few seem ripe for the chopping block.
There’s “no taboo” against dropping weak brands, said Stellantis CEO Carlos Tavares.
“There’s absolutely no taboo,” that would prevent Stellantis from axing any of its 14 brands, CEO Carlos Tavares said following an earnings conference call on Thursday.
That marked a notable shift in direction for the automaker’s chief executive who has, until now, said he wanted to give each of the various marques time to develop both strategies and products that could help them grow.
But, three years after Stellantis was formed through the merger of Fiat Chrysler Automobiles and Paris-based Groupe PSA, time appears to be running out for at least some brands, Tavares said during an interview with Bloomberg Television. And while he didn’t name names, some of the marques most at risk gave FCA its name.
“Decisions will come”
Jeep has suffered some of the sharpest declines in sales among Stellantis brands lately – but it still is considered one of the company’s most essential marques.
Brands, the Portugese-born executive said, “are here to be leveraged.’ And, he added, “If they are not able to monetize the value that they represent, then decisions will come.”
What Tavares didn’t make clear is how soon he might make the decision to cull one or more of those 14 brands. But he is under increasing pressure, especially in light of the company’s latest sales and earnings numbers. U.S. sales fell a sharp 21% during the second quarter, even as the industry posted a modest overall gain.
The bigger concern for many analysts was the 48% plunge in net profit for the first half of 2024 – the automaker reporting earnings only every six months. Net revenue was down 14% and its adjusted earnings per share tumbled 35%. That triggered a run for the exits among investors, driving shares down as much as 13% on Thursday. As of midday Friday, shares were struggling to head off a further dip.
Straining the budget
Developing EVs like the Ram 1500 have strained the Stellantis budget.
In years past, Tavares might have been forgiven for delaying and move to eliminate weak brands. While mergers often result in significant cuts, they can also help prop up weak – but promising brands and products – by offering a chance to share resources. And, indeed, Tavares earlier this year said the merger has yielded nearly double the synergistic savings originally anticipated.
But the industry is at a crossroads as global regulations force an accelerated shift to electrified and all-electric vehicles. And trying to feed every mouth in the Stellantis brand portfolio is looking harder and harder, several analysts told Headlight.News.
So, which are the ones considered most vulnerable?
More Stellantis News
- Sales Crashing, Stellantis Orders Temporary Layoffs
- Jeep Drops Prices, Prepares to Launch First EV — and Hints “Range-Extender” May Follow
- First Look: All-Electric 2025 Dodge Charger Daytona – And it Gets a Gas-Powered Sibling
The most endangered brands
With the loss of the 300 sedan the Chrysler brand now has just one product line.
There’ve been plenty of skeptics wondering just how long Stellantis could maintain 14 brands – more than any other global automaker, including Volkswagen AG. After talking to a number of industry watchers, several brand names repeatedly popped up, though there were only some surprises:
Chrysler is the brand that everyone said should be cut loose. After years of declining sales and the reality that it now has just a single product, the Pacifica minivan, the one-time namesake marque “would be the number one among North American brands” should Tavares start making cuts, said Sam Abuelsamid, principal auto analyst at Guidehouse Insights.
But there could be an even more endangered marque, experts also agreed on. Indeed, it might come as a surprise to many folks that Lancia is still in business. It’s been relegated to just the Italian market and has a product portfolio not much bigger than Chrysler’s, noted Sam Fiorani, lead analyst with AutoForecast Solutions.
Another brand that could prove forgettable is DS, formed in 2015 as a spin-off of France’s Citroen. Targeted at upscale buyers, it has its fans but “is of questionable value” overall considering its minimal sales and the high cost of product development, contended Abuelsamid. Ironically, there’s an alternative scenario Stellantis has considered. As Headlight.News reported earlier this year, the automaker has looked at ways to expand DS’s reach, perhaps bringing it to the American market.
Farewell Fiat?
The success — or failure — of the new Fiat 500e could determine its future.
Fiat is another Italian-based brand that is seen as expendable, even though it has a bit more product and a more global presence than either Chrysler or Lancia. Indeed, the late Sergio Marchionne, who served as the original FCA chief executive, had dropped hints he might kill off both the Fiat and Chrysler brands.
Whether it survives under Stellantis likely will depend on how well it does with its latest assortment of primarily battery-electric vehicles, such as the new Fiat 500e.
But with its limited range and a slowdown in the growth of the EV market, there’s little sign of momentum in the U.S. And even in Europe, where it once was a powerhouse brand, Fiat isn’t doing much better.
The flip side, noted Fiorani, is that the Turin-based brand, founded 125 years ago this month, “still has great name recognition” in a handful of markets, and remains one of the stronger marques in Ssouth America. He and others who discussed Stellantis’ options believe that could see Fiat pulled from Europe and North America but maintained in those regions where it remains strong. But were that to happen it might wind up just marketing versions of products developed for stronger sibling brands.
Other brands could yet face the chopping block
Dodge is taking a big risk with the all-electric Charger Daytona.
While not everyone agrees, Abuelsamid sees Dodge as the second most vulnerable North American brand in the Stellantis portfolio. It’s certainly taking some big risks, having last year halted production of the Charger and Challenger muscle cars. The Charger name returns later this year in all-electric form, though the brand made a late decision to play it safe by also coming up with a new gas-powered version, as well. How well Charger does could determine its future.
The other North American brands, Jeep and Ram, have some issues. But they are the corporate money machines and, if anything, Stellantis will do what it takes to keep them propped up.
As for Europe, the Peugeot badge seems safe, and after being bought from General Motors and brought back into profitability, German-based Opel also seems off the endangered list. It’s British alter-ego, Vauxhall, is another name with weak value and could simply be renamed Opel to save marketing dollars.
The spotlight falls on the other Italian brands
Alfa was the only Stellantis brand to post increased U.S. sales for the second quarter — but that was on top of a very low number in 2023.
Two other Italian brands are likely also coming under increased scrutiny, according to various industry sources. At the high end there’s Maserati. It’s a prestige marque but continues to have challenges meeting sales expectations.
Maserati is making a big push into electrified vehicles, notably with the all-electric Folgore. How it fares will be a critical factor for Tavares and company to consider.
Alfa Romeo is also preparing a big electrified vehicle program. Alfa was the fair-haired child for former FCA CEO Marchionne who believed it could become a sporty, upscale brand to rival the likes of BMW. But it’s yielded little to show for the billions that have been pumped into it. The brand saw a 9% increase in U.S. demand during the second quarter of this year but that means less when one realizes total 2023 sales were a mere 1,831 vehicles. And that was down from a 2018 peak of just 11,519.
“That’s a brand that probably wouldn’t be first on the (cutting block),” said Abuelsamid “But they may wait a few years to see how the market takes to its EVs. If they don’t do well, Alfa could also be dropped.
An industry in consolidation
Pontiac was one of four GM brands dropped as it emerged from bankruptcy.
Should Stellantis follow through and drop any marques it wouldn’t be the first to rethink its brand strategy.
American manufacturers, in particular, have paired back their portfolios over the past two decades. Ford abandoned the struggling Mercury — and gave serious consideration to axing Lincoln, as well. The old Chrysler dropped Plymouth. General Motors walked away from Oldsmobile and then was forced to shutter Pontiac, Saab, Saturn and Hummer under the terms of its bankruptcy bailout.
There’ve been plenty of brands abandoned in Europe over the years, as well.
That said, the industry has seen a number of new names appear in recent times, the vast majority of them — like Tesla, Rivian, Lucid, BYD and Geely — focused on EVs. That market segment is a work in progress and many new names, like Fisker and Faraday Future, have either gone down or are seen as unlikely to survive.
Tavares is an idiot!