Stellantis Weighs Brand Strategy Amid CEO Search

Stellantis Faces Tough Decisions on Brand Portfolio Amid CEO Search

Key Points:

• Stellantis operates 14 brands, more than its major rivals.
• Chairman John Elkann is leading the company while the search for a new CEO continues.
• Declining sales and profit margins led to the ouster of former CEO Carlos Tavares.
• The company is set to release its full-year financial results on Wednesday.

As Stellantis (STLAM.MI) chairman John Elkann interviews candidates for the CEO position, a key issue on the table is determining how many of the company’s 14 brands have a sustainable future.

Stellantis has the largest portfolio among its peers, most of whom focus on just one or two core brands. The company’s expansive lineup is a result of the 2021 merger between Fiat-Chrysler and Peugeot-owner PSA. Reducing the number of brands could streamline operations, allowing the company to merge marketing, development, and sales functions, making the automaker more efficient.

However, cutting brands is not an easy decision. Each has a loyal customer base, from top sellers like Jeep, Ram, and Peugeot to struggling names such as DS, Lancia, and Alfa Romeo.

Challenges in the European Market

In Europe, Stellantis is the second-largest carmaker, behind Volkswagen, but its most popular brand, Peugeot, only held a 4.9% market share last year, ranking eighth overall.

Additionally, Stellantis suffers from low corporate brand recognition compared to rivals like Volkswagen and Toyota. A source close to Elkann told F.M.I.E that any candidate for the CEO role must have a clear strategy for the brand portfolio, stating:

“Any applicant who doesn’t have a strong vision for the brands is not the right candidate.”

Former CEO Carlos Tavares frequently described the auto industry as being in a “Darwinian era,” where only the strongest companies will survive. Despite this, he defended Stellantis’ 14 brands, insisting they all had a future.

When Tavares was forced out in December, Elkann moved quickly to restore investor confidence, which had been shaken by declining U.S. sales and shrinking profit margins. The U.S. market—historically the company’s most profitable—saw sharp losses for Jeep, Ram, Chrysler, and Dodge, accelerating the need for change.

Global Performance & Future Strategy

Stellantis is the fourth-largest global automaker by sales but has underperformed in Europe. It shut down a Jeep joint venture in China almost three years ago and currently has no plans to re-enter the Chinese market, citing limited opportunities.

According to Fabio Caldato, an analyst at Acomea SGR, the new CEO must be bold:

“If I think as an investor, not emotionally, I’d view a major brand review as very positive.”

Analysts suggest that premium brands like Alfa Romeo, DS, and Lancia are most at risk in a potential portfolio reshuffle. Meanwhile, Dodge and Chrysler—despite weak performance—are expected to survive, thanks to strong brand recognition in the U.S. market.

The auto industry has a history of reluctance when it comes to discontinuing iconic brands. For example, GM cut Saturn and Pontiac, while Ford eliminated Mercury during the 2008 financial crisis.

In a statement to F.M.I.E, Stellantis said that each brand has a roadmap for new product development, emphasizing its commitment to diversity in its offerings:

“Stellantis is focused on providing even more choices to customers, leveraging the deep history and strong identities of its 14 brands.”

Possible Brand Consolidation?

Internally, Stellantis acknowledges the challenges of maintaining so many brands, but deciding which to eliminate is complex. Some experts believe that consolidating Chrysler into Jeep and Dodge into Ram could be a logical move.

According to Erin Keating, an automotive expert at Cox Automotive:

“If I had a magic wand, Jeep should absorb Chrysler, and Ram should absorb Dodge.”

However, Keating also noted that such a move would not result in major cost savings, as all four brands have distinct market appeal and dealer networks.

Struggles in the U.S. Market

Stellantis ranked fifth in U.S. car sales last year, with a market share of 8.1%, losing the No. 4 spot to Honda. The company’s pricing strategy has been a major issue, leading to a decline in customer demand.

“Let’s focus on bringing pricing back to where customers are willing to pay,” said David Kelleher, a Chrysler-Dodge-Jeep-Ram dealer in Pennsylvania.

Electrification & the European Market

In Europe, Stellantis faces additional hurdles, including stringent carbon emissions regulations and growing competition from Chinese EV manufacturers.

“Closing brands would be a mistake,” said Tony Fassina, a Fiat and Alfa Romeo dealer in Milan. “It would mean losing sales for sure.”

According to Marco Santino of Oliver Wyman Consulting, Stellantis is struggling in the premium market, where brands like Audi and BMW dominate.

“Brands like Peugeot and Opel overlap in the mass market, while Alfa Romeo and DS have minimal market share,” Santino said.

Analysts suggest that Alfa Romeo could shift towards niche sports cars, but repositioning it as a premium brand would require starting from scratch.

Stellantis’ Future Plans

The company has ambitious plans, aiming to launch around 20 new or updated models by late 2024 and 2025—mostly EVs and hybrids, including the Citroën C3, which is expected to be Europe’s most affordable EV.

Stellantis is also betting on its joint venture with Leapmotor, which allows it to sell, import, and manufacture Chinese EV models outside China. Some analysts even describe Leapmotor as Stellantis’ “15th brand”, signaling a potential expansion into electrification.

Will Stellantis Cut Brands?

Fiat—the company’s top-selling global brand—remains strong in emerging markets like Brazil and Turkey, as well as in the European city car market with the 500 model.

“Markets are changing fast, and unpredictably,” said Santino. “Maybe not today, but within a few years, Stellantis will have to close some brands.”

With tough decisions ahead, the new CEO will have to balance investor expectations, market trends, and brand loyalty to keep Stellantis competitive in the rapidly evolving automotive landscape.

Source: F.M.I.E