Stellantis Prioritizes Cost Cuts Over Trade Barriers to Counter China Threat

64

Stellantis is gearing up to slash costs aggressively amidst rising competition from Chinese automakers, a strategy aimed at maintaining its profitability leadership in the global market, CEO Carlos Tavares announced at the company’s investor day. Despite impending tariffs on Chinese electric vehicle imports by the European Union, Stellantis remains committed to achieving double-digit profit margins on adjusted operating income.

The EU’s decision to impose tariffs, echoing recent moves by the United States, drew criticism from Beijing as protectionist. Tavares, however, emphasized that Stellantis would not adopt a defensive stance reliant on tariffs. Instead, the company plans to uphold its “asset light” approach in China, focusing primarily on exporting rather than local manufacturing.

Tavares underscored the importance of an offensive strategy, noting that Stellantis’ asset-light model in China stands stronger compared to its competitors. He highlighted the company’s synergy gains from the Fiat-Chrysler and PSA merger, now exceeding 8.4 billion euros annually, double the initial target.

Acknowledging challenges in its U.S. operations, Tavares indicated significant turnarounds were needed at least two plants, without specifying further details pending discussions with the United Auto Workers union.

Stellantis also disclosed its investment in Chinese automaker Leapmotor, securing a 21% stake and forming a joint venture for vehicle sales and manufacturing outside China. Tavares expressed confidence in Leapmotor’s growth prospects and Stellantis’ flexibility to adapt production amidst fluctuating tariff environments.

Looking ahead, Stellantis reaffirmed its financial outlook for 2024 and aimed to achieve the upper end of its dividend payout policy range by 2025, signaling robust shareholder returns with at least 7.7 billion euros earmarked for dividends and buybacks this year.