Not Many Benefits, Stellantis Threatens To Close Harmful Brands

Maserati Folgore Range. (Doc. Stellantis)

JAKARTA - Automotive giant Stellantis is taking decisive steps to address the thin margin of profit and high stock of vehicles in the United States (US). CEO Carlos Tavares, said he did not hesitate to stop the brands that continue to lose money among his 14 brand portfolios.

Reuters reported, quoted July 26, this statement marks a change in the policy direction of Tavares. Previously, since Stellantis was formed in 2021 through the merger of Fiat Chrysler (United States-Italy) and PSA (France), he has always stated that the 14 brands, including Maserati, Fiat, Peugeot, and Jeep, have a future.

"If they don't make money, we will close it," Carlos Tavares told reporters after the world's fourth-largest automaker posted a worse first-half financial report than expected. As a result, Stellantis' shares fell by 10 percent.

"We can no longer bear brands that do not generate profits," he threatened.

Currently, Stellantis is considering Chinese Leapmotors as their 15th brand, having previously agreed on broad cooperation.

On the other hand, this automotive company has not released individual financial data for each brand, except Maserati, who reportedly suffered an operating loss of 82 million euros (around Rp1.45 trillion) in the first half.

Some analysts estimate Maserati has the potential to be sold by Stellantis. Other brands such as Lancia or DS are also wary of being stopped due to minimal contribution to the overall group sales.

Stellantis' share price in Milan fell to 12.5 percent on Thursday, to its lowest since August 2023. This makes Stellantis' shares the worst-performing among other European automakers with a 22 percent drop so far this year.

The termination of car brands has rarely occurred since General Motors (GM.N) stopped the Saturn and Pontiac losses brands during the bankruptcy led by the US government in the 2008 global financial crisis.

Tavares is under pressure to re-enhancing sluggish profit margins and sales as well as reducing vehicle stocks in the United States. Stellantis is betting on the launch of 20 new models this year which is expected to increase profitability.

Bad results global automakers have recently sparked concerns about weakening sales prospects in major markets like the US. They also have to grapple with an expensive transition to electric vehicles and increasingly fierce competition from cheaper Chinese rivals.