After a disastrous 2024, Stellantis is expecting little improvement in profitability in 2025 as it seeks to revive slumping sales and choose a new CEO after the resignation of Carlos Tavares last year.
Stellantis is forecasting an adjusted operating margin of “mid-single digits” in 2025, with “positive” free cash flow and net revenue growth, the automaker said Feb. 26.
The guidance reflects the “early stage of the commercial recovery as well as elevated industry uncertainties,” Stellantis said.
“We are firmly focused on gaining market share and improving financial performance as 2025 progresses,” Chairman John Elkann said in a statement.
The dismal performance means profit-sharing payouts for UAW-represented workers in the U.S. will drop 73 percent, to an average of $3,780. About 38,800 employees are eligible, and the actual amount paid March 7 will vary based on hours worked.
The payouts are based on the company’s North American margin, which fell to 4.2 percent from 15.4 percent in 2023. Adjusted operating income in the region plunged 80 percent to $2.8 billion, Stellantis said, citing “significant impacts from volume/mix, increased sales incentives and higher warranty costs.”
Analysts at Citi said margin recovery could be visible only from next year. “It is very hard to turn around car companies. Replacing the product range and repricing it at attractive levels for consumers is a long-term and expensive process,” they said in a note.
Operating margin in 2024 was 5.5 percent — down from 12.8 percent in 2023 — on an adjusted operating income of €8.6 billion ($9 billion), at the low end of guidance provided after a shock profit warning in September.
Total revenues fell 17 percent last year, to €157 billion, with a 12 percent drop in global shipments, because of “temporary gaps” in the product range and “now-complete inventory reduction initiatives,” the company said. Net profit was down 70 percent to €5.5 billion, versus €18.6 billion in 2023.
Free cash flow was negative €6 billion, compared with €12.9 billion in 2023.
Progress in reducing inventories
Stellantis said it was making better-than-forecast progress on reducing inventories, especially in the U.S., where dealers had complained that prices of cars from Jeep and Ram were too high.
As of Dec. 31, total inventories were 18 percent lower year over year, with U.S. dealer stock down by 20 percent.
Muted car demand in Europe and the threat of higher tariffs in the U.S. are clouding Stellantis prospects.
While Stellantis is searching for Tavares’ successor — it said it will name a new CEO in the first half of this year — the company has made significant changes. Elkann has reshuffled management and announced investments in the U.S., where Stellantis plans to revive sales with new models including a locally built midsize pickup.
Last year, Stellantis hemorrhaged market share in North America because of a lackluster lineup and frayed relations with dealers and suppliers. Its adjusted operating income in the region slumped 80 percent in 2024.
Struggles in Europe
Stellantis is also struggling in Europe. Its sales in the region fell 7.3 percent last year and 16 percent in January — the worst performance among the major automakers. Its adjusted operating income in Europe fell 63 percent in 2024.
Elkann said he wants the company on the path of recovery before selecting a new CEO, Bloomberg reported this month. He has already given more power to regional executives, a change from the more centralized decision-making under Tavares.
More financial transparency
Stellantis will also switch to full quarterly reporting of financial results in 2026, “responding to investor feedback requesting more frequent, comprehensive metrics and guidance.”
After it was formed in January 2021 in the merger of PSA Group and Fiat Chrysler Automobiles, Stellantis adopted the French model of giving full results only every six months, with revenues only in the first and third quarters.
Stellantis said it would offer more transparency on strategy, targets and financial benchmarks, as well as better comparability with peers.
Vince Bond Jr., Bloomberg and Reuters contributed to this report
