Stellantis profits beat rivals but sales in US prompt reset

The news about Stellantis this year has focused heavily on the record profits generated by the global automaker — but that profit margin doesn’t quite tell the whole story.

The UAW strike last year targeting the parent of Jeep, Ram, Chrysler, Dodge and Fiat, along with Ford Motor Co. and General Motors, still left Stellantis with a hefty profit in 2023, almost $20 billion and an 11% bump from a year prior.

It solidly outperformed its Detroit Three competitors at earnings time, with Ford reporting net income of $4.3 billion and GM at $10.1 billion for 2023.

The results led to $39.5 million in total compensation for Stellantis CEO Carlos Tavares last year.

But Stellantis’ rosy financial picture also came as the automaker, which formed in 2021 from the merger of Peugeot maker PSA Group and Fiat Chrysler Automobiles, watched its sales in the important U.S. market decline for the year, making the automaker an outlier among its peers, which all saw sales increases.

In fact, Stellantis’ U.S. sales in 2023 were eclipsed by Hyundai, according to data from Cox Automotive, putting the automaker at No. 5, following GM, Toyota, Ford and the surging South Korean company that includes the Kia and Genesis brands. Honda and Nissan/Mitsubishi were next in line.

Stellantis’ U.S. market share also fell to less than 10%, a notable result for a company that owns the Chrysler piece of the Detroit Three. While combined shipments globally were up 6%, according to its earnings report, sales in the United States at more than 1.5 million for the year fell 1.3%. GM, by comparison, sold close to 2.6 million vehicles, and Hyundai was at more than 1.6 million, according to Cox Automotive. Honda sold more than 1.3 million vehicles.

Michelle Krebs, executive analyst at Cox Automotive, said the significance really depends on what Stellantis’ leadership wants.

“We have to know what the priorities for Stellantis are. It may not be volume anymore. They definitely have put more emphasis on margins and getting the best prices they can,” she said, noting that the automaker is doing well by many measures while also facing some interesting challenges in North America.

Notably, Stellantis’ average transaction price in the fourth quarter of 2023 hit $59,292, “a level well-above either Ford or General Motors,” according to Cox Automotive.

When asked whether workers should be concerned about the sales picture, Krebs pointed to Stellantis inventories, with the company outpacing the rest of the industry in that category. Chrysler and Dodge had at least twice the industry average for January, with Jeep and Ram also near the top.

“Something’s got to give,” Krebs said, pointing to production cuts or incentives as the way companies generally deal with high levels of inventory.

The company has engaged in cuts to its workforce in recent months. However, the overall picture is murky because the automaker hasn’t clarified how many jobs are being eliminated. The company noted that a round of cuts announced in December for plants in Detroit and Toledo was significantly smaller than originally described, but a separate round of cuts affecting supplemental workers across company facilities is rolling out this week.

The company, which won’t disclose the size of this latest round of cuts, had also said in January that it was cutting 539 supplemental employees, a move that prompted an angry UAW reaction. The union has touted the conversion of supplemental workers, formerly known as temporary workers, to full-time following contract bargaining last year.

The company pointed to efficiency when asked about the cuts.

“As part of our normal course of business, Stellantis regularly analyzes staffing levels at our manufacturing facilities to ensure they are operating as efficiently as possible. Following an operational review, and to ensure compliance with contractual commitments, the company is reducing the number of supplemental employees across much of our U.S. footprint,” according to a statement provided Monday by Stellantis spokeswoman Ann Marie Fortunate. “Overall, the reductions at the Toledo Assembly Complex and Detroit Assembly Complex-Mack resulted in fewer employees being impacted than originally estimated. This action will help improve the efficiency, productivity and market competitiveness of our facilities as we implement our Dare Forward 2030 strategic plan.”

In its December announcement, the company said that 2,455 workers in Detroit and 1,225 in Toledo could be affected, with possible cuts effective as early as Feb. 5, while suggesting that the numbers would likely be lower because the company was trying to account for every possible person who could be affected. In the end, those numbers dropped to 341 in Toledo, and personnel in Detroit were shifted to other facilities, according to the company.

UAW President Shawn Fain, in a statement, emphasized the conversion of supplemental workers but also blasted the automaker for its cuts:

“Under this new contract, we have successfully converted around 3,000 so-called temps to permanent jobs with life-changing raises and benefits. When we said this is a record contract, that’s what we meant. And yet Stellantis has chosen to take the low road and terminate around 2,000 others, while the CEO gives himself a 56% raise to an astonishing $40 million. When we said this is about corporate greed, that’s what we meant. Stellantis can do right by every last one of its workers, and we will fight to make sure they do.”

As for the future, Stellantis has signaled that it is focused on sales.

Stellantis executives have been talking openly about the need to grow the company’s market share recently. The company has also shaken up the leadership ranks at its key Jeep and Ram brands, an effort that apparently began last year when Dodge CEO Tim Kuniskis also took on the top spot at Ram.

Dodge and Ram, incidentally, are both among the brands launching electric vehicles this year — versions of the 2024 Dodge Charger Daytona EV were unveiled this week, for instance — but the EV sales pictures is a bit complicated so it’s not clear what to expect from these new entrants.

New global Jeep brand CEO Antonio Filosa and other members of his team, met with journalists at the company’s Auburn Hills offices recently to discuss brand ambitions and changes already underway. A couple of pre-production electric vehicles, the Jeep Recon and Wagoneer S, were available for viewing.

Filosa highlighted the strengths of the Jeep brand, including its many devoted fans, and its connection to U.S. involvement in World War II. Inflation, he said, had hit U.S. consumers hard, and one piece of the strategy to grow the brand would be to cut prices on several models and add content. He referenced the new leadership team, which includes William Peffer Jr., the former head of Maserati in the Americas, who took over the North American regional role at Jeep, as well as plans to boost marketing, fold Wagoneer and Grand Wagoneer fully into the Jeep brand and significantly boost market coverage through electrification.

“The brand is in transition, right? We need to do something on market penetration and market share because it’s not where this brand deserves to be,” Filosa said.

One advantage Jeep is key to exploit involves its plug-in hybrid electric 4xe models. The company says the electrified Wrangler and Grand Cherokee versions hold the No. 1 and 2 U.S. sales spots, with the Chrysler Pacifica Hybrid at No. 3.

“At Jeep, we own this market,” Filosa said, noting that 90% of sales are “pure conquest,” meaning customers who were previously in other brands.

Carlos Zarlenga, who took over as Stellantis’ chief operating officer for North America in February, discussed market share and profitability in a recent interview with the Free Press, noting that he doesn’t believe there’s a tradeoff between the two.

“I think both are important, and I think growth is important for us. Looking at this year, definitely growth is part of our objective here, and growing back our market share is definitely an objective,” he said.

But market share isn’t simply something to pursue, he went on. It’s a question of having the right products, quality and value.

“You don’t chase market share. You chase the variables that get you there,” he said.Zarlenga identified dealer relations as key in improving the picture for the company in North America but also touted a reorganization announced in February of the company’s sales team in the region.

“Organizationally, our results are definitely going to start getting better. And we’re … already starting to see some traction there, and so I feel pretty good about that,” Zarlenga said.

For Hyundai, taking over the No. 4 U.S. sales spot from Stellantis wasn’t the primary goal, according to a spokeswoman.

“Hyundai finished 2023 with an all-time total sales record and a third consecutive record year for retail sales. Thus far in 2024, we continue to increase sales of electric vehicles and plug-in hybrid vehicles achieving substantial year-over-year growth,” said Michele Tinson, spokeswoman for Hyundai. “There is no particular objective for passing certain automakers, but we are focused on growing profitable sales and market share working closely with our dealer network.”

Karl Brauer, executive analyst at iseecars.com, pointed to the impact of Hyundai’s approach so far.

“Hyundai has consistently delivered high-value, highly desirable vehicles over the past decade while expanding its reach in the hybrid, plug-in hybrid, electric, and luxury segments. That level of product execution ensures growing market share, as seen across the Hyundai, Kia, and Genesis brands,” Brauer said. “Stellantis is still a relatively new entity, with impressive global reach and access to advanced drivetrain and driver-assist technology. The company’s short- and mid-term potential remains high, but it has to match Hyundai’s success across its own product portfolio to defend, and potentially recapture, market share.”

Contact Eric D. Lawrence: elawrence@freepress.com. Become a subscriber.

This article originally appeared on Detroit Free Press: Stellantis sales picture prompts moves to boost US market share