Stellantis attempts 'right-sizing' its business amongst tariff turmoil

Yahoo

28-07-2025

Big Three automaker Stellantis (STLA) will give a more detailed look into its first half financials after releasing preliminary figures last week.
Stellantis — which counts brands like Ram, Jeep, Fiat, and Alfa Romeo in its product portfolio — said it expects net revenues in the first half of 2025 to come in at 74.3 billion euros ($86.13 billion), resulting in a net loss of 2.3 billion euros ($2.67 billion).
Stellantis said it expects adjusted operating income to come in at 500 million euros ($579.6 million), with cash flows from operating activities slipping to a loss of 2.3 billion euros ($2.67 billion).
The automaker said it issued preliminary results due to the divergence between the company's performance and analyst consensus forecasts.
Stellantis stock is down 26% year to date.
The company's pre-announcement follows Stellantis pulling its full-year guidance last quarter due to 'tariff-related uncertainties,' but with a US-EU preliminary tariff deal in place, it is possible Stellantis may issue revised forecasts. Stellantis said last week that it absorbed approximately 300 million euros ($347.77 million) in tariff-related costs as well as loss of planned production.
Only two months ago, Stellantis selected Antonio Filosa, a 25-year veteran of the company and current Americas COO, as its new chief executive. His tenure began on June 23, with interim CEO John Elkann remaining as executive chair.
Filosa has his hands full repairing the Stellantis business. For the second quarter, Stellantis said global deliveries fell to 1.447 million units from 1.537 million a year ago, down 6%. Sales tumbled in the US 25%, while the greater European region saw sales drop 6%.
Stellantis has been trying to pare bloated inventories in the US with pricing incentives and production cuts, and those measures have helped. But the big question remains, at least in the US, of the effect of auto sector tariffs targeting Canada and Mexico production.
Stellantis makes several vehicles in Canada and Mexico, where 25% sector tariffs apply to all imports, in addition to auto parts tariffs. Last quarter, Stellantis idled production at plants in Canada and Mexico as a result of tariffs.
Read more: 5 ways to tariff-proof your finances
A just-announced US-EU tariff deal could help Stellantis, but issues including unpopular vehicles and existing tariffs for Canadian and Mexican imports will still be a problem.
'We need to hear how the group can reverse the market share retreat, whilst at the same time right-sizing the business for what appears to be a smaller opportunity set. In our minds there are no quick fixes here,' wrote HSBC analyst Michael Tyndall shortly after last week's pre-announcement.
Analysts like Deutsche Bank's Christoph Laskawi believe the status of Stellantis' dividend should be up for debate too, given the company's potential low margins and high cash burn.
Pras Subramanian is the lead auto reporter for Yahoo Finance. You can follow him on X and on Instagram.