Stellantis' new CEO, Antonio Filosa, is prioritizing sales growth over profits, even turning to lower-margin fleet sales and investing in more affordable models in a bid to recapture market share in North America and Europe and get the group back on track.
Four sources familiar with the matter told Reuters.
Filosa, who took office in June, has launched what one source described as an "emergency room" operation to remedy the chaos left by his predecessor Carlos Tavares. Tavares had focused on high margins by combining cost cuts and price hikes, a strategy that triggered an exodus of customers.
Tavares was pushed to resign at the end of last year as Stellantis' 2024 U.S. sales plummeted 15%--the group's main profit engine--even as the sector as a whole grew 2.2%, leaving dealers clogged with unsold inventory.
Filosa's immediate goal is to deliver sales and revenues this year above analysts' low expectations--their best-case scenarios point to flat results compared to 2024, the same source said.
Early data suggests his strategy is beginning to work: Stellantis' North American sales rose 6.6% in the third quarter, the first increase in eight quarters.
Details of Filosa's short-term sales strategy and the long-term sustainability of the group's brands, reported here for the first time, are emerging as the automaker seeks to recover lost market share.
The plans aim to restore credibility among customers, investors, and dealers, while keeping factories running.
Reuters spoke with six sources in total--two inside the company, two external sources with knowledge of the situation, and two representatives of major Stellantis shareholders--who requested anonymity as they were not authorized to discuss the matter publicly.
Stellantis' strategy is unfolding at a time when the automotive industry must contend with U.S. tariffs, a costly transition to electric vehicles (EVs), and aggressive competition from Chinese manufacturers.
Under Filosa's leadership, "Stellantis is accelerating initiatives (...) to correct past strategic and operational decisions," a group spokesperson said.
The plan is backed by the main investors--Exor, controlled by the Agnelli family, the Peugeot family, and the French government--three sources said.
Filosa's tactics include turning to fleet sales in the U.S.--to rental companies, businesses, and government agencies, a method automakers have historically used to clear inventory and inflate volumes, an industry source said--and investing in the more profitable Jeep and Ram models.
Filosa is also tackling a long-standing issue left unresolved by his predecessor: determining which of Stellantis' 14 brands--including Fiat, Peugeot, Citroën, and Maserati--have a sustainable future, the first source said.
The company will also abandon ambitious electric vehicle (EV) sales targets as Filosa makes the U.S. market his priority, unlike Tavares, who had taken the "opposite direction," a Stellantis insider said.
"Filosa fully understands what North America means for the company," said Sam Fiorani, vice president at research firm AutoForecast Solutions.
FOCUS ON POPULAR JEEP BRAND AND AFFORDABILITY
Formed in early 2021 from the merger of Fiat Chrysler and France's PSA Group, Stellantis had ambitions of leadership in future automotive technologies as the world shifted to electric.
But the company cut costs and dropped popular models like the Jeep Cherokee in the U.S. market to maintain the double-digit margins promised by former CEO Tavares to Stellantis shareholders.
Stellantis set prices too high for customers and allowed rivals like Ford's Bronco to erode Jeep's market share.
The group's U.S. market share fell below 8% this year--a historic low for Stellantis, and previously for Fiat Chrysler, according to auto-buying consultancy Edmunds--down from 12.5% in 2020.
Under Filosa, the automaker has abandoned direct investments in autonomous driving--as previously reported by Reuters--and in hydrogen vehicles, in a back-to-basics approach.
This also includes dropping a key Tavares commitment: reaching 100% EV sales in Europe and 50% in the U.S. by 2030.
The group has already reintroduced popular models like the Cherokee and the powerful V8 'Hemi' gasoline engine in the U.S. market. More affordable models are planned to recover lost share to competitors offering competitive entry-level vehicles.
Filosa said this month that Stellantis' product launch sequence would lead to "highly sustainable and progressively improving" sales growth quarter after quarter.
"They've made a series of missteps in recent years," said Fiorani of AutoForecast. "They need to rebuild the lineup... revive Dodge or something else with a product that costs less than $30,000."
A company source said Stellantis is confident it can regain lost U.S. market share, but did not provide specific targets.
Marco Santino, partner at consultancy Oliver Wyman, said restoring Stellantis' U.S. market share to 2021 levels is feasible.
"It's a credible goal for North America, where the group has faced difficulties," Santino said, "but where its overall structure has remained largely the same."
Filosa is reshaping Stellantis' management, promoting Italian and Brazilian managers from his time at FCA and Stellantis in Latin America; he is also hiring executives, engineers, and tech experts to strengthen teams thinned under Tavares, two sources said.
SACRIFICING MARGINS
Corporate fleet sales, discouraged under Tavares, are being used to rebuild Stellantis' volumes and keep factories running, the industry source said.
Although fleet margins are lower than retail sales, if "well managed" they help maintain visibility and support production, explained Fiorani of AutoForecast.
"If no one is driving a particular model, retail buyers won't know it exists without expensive advertising," he said. This means that if consumers see a car on the road or drive it as part of a rental fleet, they're more likely to take notice.
Harry Criswell--U.S. dealer and president of Criswell Automotive, which operates 12 dealerships in Virginia and Maryland--believes Stellantis is more attentive to the needs of business leaders and fleets.
"They want to sell cars," Criswell said. "They want to produce (...) much higher-quality cars than in the past."
According to three sources, Filosa is willing to sacrifice short-term margins as he invests in better products to prove Stellantis can still produce successful models.
In October, Stellantis announced a $13 billion investment in the U.S. market to boost sales and offset tariffs.
Stellantis' main shareholders know real solutions will take years and, for now, are willing not to pressure Filosa on profitability, three sources said, including two shareholders.
In October, Filosa said a 6-8% margin on adjusted operating income (AOI) was a "reasonable medium- to long-term target."
Adjusted operating income is expected to be in the "low single digits" this year. Most analysts do not expect more than 5% by 2027--compared to around 13% in 2022 and 2023.
But shareholder patience could run out if margins do not recover soon after the sales rebound. A source close to a major investor said that while boosting sales is "a good thing, margins are also needed to fund future investments."
"ONE PLUS ONE DOESN'T MAKE TWO"
Even before Stellantis was created, Tavares, then CEO of PSA, warned that the auto industry was entering a "Darwinian" period in which only the most agile brands would survive.
But while he repeated his Darwinian refrain as CEO of Stellantis, Tavares never touched any of the group's 14 brands.
Unlike in the U.S., where Stellantis' brands have different customer bases but share the same dealerships, in Europe the FCA-PSA merger brought together overlapping brands, making it much harder to recover lost share, said Santino of Oliver Wyman.
"It's a tougher goal for Europe," he said. "In this case, one plus one doesn't make two."
Brands like Peugeot and Opel compete in the same segments, while premium brands DS and Lancia hold minimal market share.
Filosa is therefore assessing the long-term sustainability of all 14 brands, a source familiar with the matter said.
His options could include eliminating some brands, particularly overlapping European ones.
The coming months will be crucial.
Strong U.S. year-end sales could give Filosa time to present a long-term strategy and reassure investors that Stellantis is not in structural decline.
"Are they where they should be? No, not even close," said Criswell of Criswell Automotive. "But I think they've made remarkable progress in a short time."
(Translated by Claudio Leonel Piacquadio, editing by Claudia Cristoferi)
