Carmaker Stellantis pledges to tackle problems in North America as profits plunge

MILAN (AP) — Stellantis CEO Carlos Tavares pledged action to tackle problems in North America and elsewhere Thursday after reporting a plunge in first-half earnings.

U.S.-European automaker Stellantis reported net profits down by half in the first half of the year due largely to lower sales and restructuring costs.

The carmaker, which was created in 2021 from the merger of Fiat-Chrysler with PSA Peugeot, reported net profits of 5.6 billion euros ($6 billion) in the period, down 48% compared with 11 billion euros in the same period last year. Revenues in the period dropped 14% to 85 billion euros.

Tavares acknowledged that the performance “fell short of our expectations, reflecting both a challenging industry context as well as our own operational issues.” He said the issues were being addressed, and expressed hope the launch of 20 new vehicles this year would improve profits.

He pointed to North America as a place where there is “significant work to do,” including inventory management and sliding market share.

The company reported adjusted operating income of 8.5 billion euros ($9.23 billion), down 5.7 billion euros from the first half of last year. Stellantis said the drop was primarily due to decreases in North America.

Tavares also told reporters that the global auto industry is in the midst of a storm that he had predicted previously, caught between consumers looking for more affordable vehicles and demands for more capital spending to develop new electric and gas-powered vehicles.

In North America, Tavares said the company let inventory get too high, and plans to fix that in the first half didn't work. Sticker prices, he said, are too high and often send customers fleeing from showrooms early in the shopping process.

The company, he said, is offering incentives such as low-interest financing, that reduces its prices. But the sticker price in some cases is higher than competitors, he said. “If you don’t package it immediately, then the customer walks out because he’s afraid of the sticker price,” Tavares said.

In the U.S. in June, it took an average of 97 days on dealer lots for Stellantis to sell vehicles, the highest in the industry, according to Edmunds.com.

Tavares said the company has fixed inventory problems in Europe but has work to do in the U.S. “Hopefully this is going to work much better than in Q2, and we will be able to solve the inventory, issue that we have to solve,” he said.

U.S. shares of Stellantis were down more than 10% in Thursday afternoon trading. They are down almost 11.8% this week.