Stellantis is facing significant challenges as its stock has fallen 42% this year, exacerbated by potential U.S. tariffs and declining production forecasts in France. The company anticipates producing only 605,000 vehicles in 2024, a 20% reduction due to decreased demand and supply chain issues. Production cuts are affecting multiple factories, leading to concerns about future operations. Despite a potential recovery in 2025, uncertainty looms over vehicle performance and market dynamics, necessitating urgent stabilization efforts.
Stellantis Faces Tough Times Amid Market Turbulence
The outlook for Stellantis appears increasingly grim. This automotive giant, formed through the merger of PSA and Fiat Chrysler, is currently navigating a challenging landscape marked by a significant drop in its stock value and a sharp reduction in its production forecasts for France in 2024. These developments raise serious concerns about the future viability of this European manufacturer.
Stock Market Reaction to Political Developments
On Tuesday morning, the Paris Stock Exchange experienced a notable downturn for Stellantis as its stock plummeted by 4.78%, trading at 12.19 euros. This decline represents a staggering 42% decrease since the beginning of the year. The downturn follows recent announcements from Donald Trump, the newly elected president of the United States, regarding imminent protectionist policies. Trump revealed his intention to sign a decree on January 20, which would impose a 25% tariff on products imported from Mexico and Canada, alongside an additional 10% tax on goods from China.
The implications of these policies are casting a shadow beyond North America. “There is growing apprehension that Europe might also become a target, even if Trump did not directly reference the continent,” states Alexandre Baradez, an analyst at IG France. The ripple effects are evident as other automotive stocks suffer; Renault fell by 0.53%, while Valeo saw a 2.57% drop. In Germany, major players like Volkswagen, BMW, and Mercedes-Benz also recorded declines of over 2%.
Stellantis finds itself particularly vulnerable. The company’s plans to shift Ram pickup production to lower-cost countries may now be jeopardized, adding to the uncertainty amid a weakening global automotive market.
Declining Production Forecasts in France
Simultaneously, Stellantis has revised its production outlook for France, forecasting a drop to just 605,000 vehicles in 2024, down from an initial estimate of 766,000. This 20% reduction is attributed to a contraction in the European automotive market, which has decreased demand for locally produced SUVs, sedans, and vans. Contributing factors also include a loss of market share and delays in production due to software issues and parts shortages.
Every factory in France is affected, with some facing more severe cuts than others. In Mulhouse, home to the Peugeot 308, 508, and DS 7 e-Tense, production is set to decline by 22%. Hordain, which specializes in vans, is experiencing a similar reduction, raising concerns about potential relocation to Turkey. Logistical delays and supply chain shortages have further exacerbated these issues.
In Poissy, the situation is particularly dire, with production expected to fall below 100,000 vehicles, marking a 28% drop. Stellantis’ flagship site in Sochaux will also see a decrease, producing only 165,000 cars instead of the planned 200,000. However, there is some hope for improvement in 2025, with projections suggesting output could rise to approximately 300,000 units, driven by the anticipated success of the new SUV models 3008 and 5008.
A Challenging Road Ahead
The medium-term outlook for Stellantis remains uncertain. While 2025 may bring a boost with production expected to reach 789,000 vehicles, projections for 2026 indicate a decline to 672,000 units, which is 100,000 less than initially planned. This decline is largely due to the underperformance of the DS and Peugeot sedans at the Mulhouse plant, alongside uncertainties surrounding van production in Hordain.
Despite these difficulties, the Poissy plant has received a temporary reprieve with the Opel Mokka’s production lifespan extended until 2029. In the meantime, Stellantis is actively seeking new opportunities to sustain operations, particularly in logistics and the development of the forthcoming ‘Green Campus’, a dedicated research and development center.
These dual crises underscore Stellantis’ susceptibility to economic volatility and geopolitical decisions. With American tariffs looming, dwindling demand in Europe, and internal challenges, the automaker must intensify its efforts to stabilize operations and restore investor confidence.