Costs at the owner of Fiat, Jeep and Ram are close to the bones as Stellantis’ sales drop

Stellantis’ push for deep cost cuts is coming up against limits just as auto markets slow and returns flag.

The maker of Ram pickups and Jeep SUVs will look to soothe concerns about its position – it’s been giving up ground in the US and Europe – when it convenes investors Thursday in Auburn Hills, Michigan. Shares in the company led by Chief Executive Officer Carlos Tavares have dropped 13 per cent since management slipped a profit warning into a quarterly call in April.

“Tavares used to be a market darling, always under-promising and over-delivering,” said Florian Allain, senior portfolio manager at Mandarine Gestion and a Stellantis shareholder. “The first-quarter warning is the first big stumble in a trajectory that had been perfect until now.”

Stellantis on Thursday broadly confirmed targets for this year, including a first-half operating return of 10 per cent to 11 per cent while industrial cash flow will be “visibly” below the same period a year ago, it said in a statement ahead of the meeting. Cash flow will improve during the second half of the year on the back of a range of new models and cost cuts, the company said.

Since the 2021 merger of Fiat Chrysler and France’s PSA Group, Tavares has lowered costs by pooling resources. Measures have included cutting the number of vehicle platforms to just four from 25 and eliminating jobs – at times, to the chagrin of governments seeking to protect workers.

The efforts largely paid off, with record returns putting Stellantis ahead of rivals like Volkswagen AG and Renault SA with the highest margins among mass-market manufacturers.