Skip to main content
Sister Publication Links
  • Automotive News
  • Automobilwoche
  • Automotive News Canada
  • Automotive News China
Subscribe
  • Subscribe
  • Newsletters
  • Login
  • HOME
    • Latest news
    • Automakers
    • Suppliers
    • New Product
    • Environment/Emissions
    • Sales By Market
    • On The Move
    • Auto Shows
    • Munich Auto Show
    • Geneva Auto Show
    • Paris Auto Show
    • Beijing Auto Show
    • Shanghai Auto Show
  • Features
    • Long Read
    • Interview of the Month
    • Focus on Electrification
    • Focus on Technology
    • Segment Analysis
    • Cars & Concepts
    • Supplier Spotlight
    • Europe By The Numbers
  • Opinion
    • Blogs
    • Commentary
    • Guest columnists
  • Photos
    • Photo Galleries
    • Geneva Photo Gallery
    • Beijing Photo Gallery
    • Frankfurt Photo Gallery
    • Paris Photo Gallery
    • Shanghai Photo Gallery
  • Podcasts
  • Car Cutaways
  • EVENTS
    • ANE Congress
    • ANE Rising Stars
    • ANE Eurostars
  • More
    • Publishing Partners
    • Social Media
    • Contact Us
    • Media Kit
    • About Us
    • Capgemini: Invent Head on automotive takeaways from CES 2023
    • Capgemini: Securing the industry's future through a radical rethink
    • Capgemini: Succeeding with the automated driving journey through AI
    • Capgemini: The circular economy is spurring new thinking on EV batteries
    • Capgemini: Toyota and Capgemini leaders on how OEMs can handle industry changes and succeed
    • HEXAGON: Plugging into data is the only way to make winning EVs
    • TUV Rheinland: Ideas, services and certifications for smart mobility
    • TUV Rheinland: Testing of automated and autonomous vehicles on test tracks
    • Toyota Europe
    • UFI Filters
    • Facebook
    • Instagram
    • LinkedIn
    • Twitter
MENU
Breadcrumb
  1. Home
  2. Automakers
February 23, 2022 09:12 AM

Stellantis cut break-even point to less than 50% of capacity in 2021, CEO says

Stellantis CEO Carlos Tavares said the automaker's break-even point was less than 50% of capacity, protecting it from 'chaos.'

Luca Ciferri
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print
    Peugeot 3008 production

    Peugeot 3008 production at Stellantis' factory in Sochaux, eastern France.

    TURIN -- Stellantis CEO Carlos Tavares said the automaker was able to reduce its break-even point to less than 50 percent of its installed production capacity in the final months of last year. It did so to protect Stellantis from "chaos" created by the combination of the chip shortage, rising raw materials prices and geopolitical risks.

    The auto industry standard break-even point is generally 70 to 80 percent of installed capacity, as measured by the Harbour index, which is based on a plant working two eight-hour shifts for 235 days a year.

    Stellantis declined to give a volume figure for the company's current break-even point or reveal what that number was when the group was created by the merger of PSA Group and Fiat Chrysler Automobiles in January 2021.

    Last year, Stellantis shipped 6.14 million units to its distributors and dealers, up 3 percent from 5.95 million in 2020 on a pro-forma basis combining the two group's results.

    Its adjusted operating margin jumped by 95 percent to 18 billion euros ($20.4 billion), equivalent to an 11.8 operating margin compared with a 6.9 percent margin in 2020, also on a pro-forma basis.

    Tavares told reporters Wednesday that the idea to reduce Stellantis' break-even point come to mind during his summer break, adding he was proud the company reached this goal by the end of 2021.

    "On Sept. 1, I brought the top leadership team to a specific meeting and we decided that we would look to bring the company below 50 percent [of capacity] break-even point," Tavares said.

    His said his view was that there are so many uncertainties around the auto industry that Stellantis needs to think continuously about on how to protect itself from this "chaos."

    Tavares has long considered the break-even point to be a key measure of an automaker's financial health, a point he reiterated on Wednesday in announcing record earnings at Stellantis.

    One of his accomplishments after becoming CEO of PSA in 2014 was to cut the then-struggling group's break-even point to 1.6 million vehicles in 2017 from 2.6 million in 2013. And after acquiring Opel from GM in 2017, he set the break-even point to 800,000 vehicles from an undisclosed number (at the time, Opel was losing hundreds of millions a year while selling about 1 million vehicles annually).

    Pros, cons to chip shortage

    Tavares said that last year's tailwinds offset headwinds at Stellantis.

    The chip shortage -- which led to an imbalance between supply and demand due to production constraints -- gave automakers much better pricing power. "Which, to make it simple, means less discounting and higher margins," he said.

    On the other hand, he said, an increase in raw materials prices offset much of that higher profitability.

    Tavares cited the European market as an advantage of having a lower break-even point. Post-pandemic volume is about 15 millions units, almost 20 percent below the pre-COVID level of 18 million units.

    "Given that Stellantis has a share of about 20 percent of the European market, we lost about 600,000 annual sales, even though our market share was unchanged," he said.

    Looking ahead, Tavares said that a return to a normal level of chip supply will increase his profit pool, but potentially at lower margins.

    "If there is more chip supply, there will be less imbalance between supply and demand, and therefore less pricing power," he said. Increased overall profits will cover fixed costs, he added, "but the per-unit margins may be a little bit lower, because we still have raw materials cost inflation."

    DAILY NEWSLETTER: Sign up and get the top news of the day in Europe every business weekday.
    RECOMMENDED FOR YOU
    UK has concerns over U.S. green subsidy act, finance minister says
    Recommended for You
    Tesla Model 3 red web_0.jpg
    UK has concerns over U.S. green subsidy act, finance minister says
    Renault Douai_Plant
    Renault will offer workers 7.5% pay increase, report says
    Toyota Akio TOYODA
    Toyoda set to remain a force at Toyota, even as he bows out
    Capgemini Invent Head on automotive takeaways from CES 2023
    Sponsored Content: Capgemini Invent Head on automotive takeaways from CES 2023
    Sign up for free newsletters
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    Get Free Newsletters

    Sign up and get the best of Automotive News Europe delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    SUBSCRIBE TODAY

    Get 24/7 access to in-depth, authoritative coverage of the auto industry from a global team of reporters and editors covering the news that’s vital to your business.

    SUBSCRIBE NOW
    Connect with Us
    • Twitter
    • Facebook
    • LinkedIn
    • Instagram

    Founded in 1996, Automotive News Europe is the preferred information source for decision-makers and opinion leaders operating in Europe.

    Contact Us

    1155 Gratiot Avenue
    Detroit MI  48207-2997
    Tel: +1 877-812-1584

    Email Us

    ISSN 2643-6590 (print)
    ISSN 2643-6604 (online)

     

    Resources
    • About us
    • Contact Us
    • Advertise with us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Awards
    • Rising Stars
    • Eurostars
    • Leading Women
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Automotive News Europe
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • HOME
      • Latest news
      • Automakers
      • Suppliers
      • New Product
      • Environment/Emissions
      • Sales By Market
      • On The Move
      • Auto Shows
        • Munich Auto Show
        • Geneva Auto Show
        • Paris Auto Show
        • Beijing Auto Show
        • Shanghai Auto Show
    • Features
      • Long Read
      • Interview of the Month
      • Focus on Electrification
      • Focus on Technology
      • Segment Analysis
      • Cars & Concepts
      • Supplier Spotlight
      • Europe By The Numbers
    • Opinion
      • Blogs
      • Commentary
      • Guest columnists
    • Photos
      • Photo Galleries
      • Geneva Photo Gallery
      • Beijing Photo Gallery
      • Frankfurt Photo Gallery
      • Paris Photo Gallery
      • Shanghai Photo Gallery
    • Podcasts
    • Car Cutaways
    • EVENTS
      • ANE Congress
      • ANE Rising Stars
      • ANE Eurostars
    • More
      • Publishing Partners
        • Capgemini: Invent Head on automotive takeaways from CES 2023
        • Capgemini: Securing the industry's future through a radical rethink
        • Capgemini: Succeeding with the automated driving journey through AI
        • Capgemini: The circular economy is spurring new thinking on EV batteries
        • Capgemini: Toyota and Capgemini leaders on how OEMs can handle industry changes and succeed
        • HEXAGON: Plugging into data is the only way to make winning EVs
        • TUV Rheinland: Ideas, services and certifications for smart mobility
        • TUV Rheinland: Testing of automated and autonomous vehicles on test tracks
        • Toyota Europe
        • UFI Filters
      • Social Media
        • Facebook
        • Instagram
        • LinkedIn
        • Twitter
      • Contact Us
      • Media Kit
      • About Us