The Stellantis logo on a building in Chartres-de-Bretagne, France, on March 11. Stellantis said Thursday that it will stick to its 'asset light' strategy on China one day after the EU announced it would impose extra duties on imported Chinese electric vehicles.Stephane Mahe/Reuters
Stellantis STLA-N will aggressively move to cut costs as competition from Chinese automakers intensifies rather than use a “defensive” strategy that relies on tariffs on Chinese-made imports that European officials are set to institute in that region, its CEO said on Thursday.
Carlos Tavares promised at the No. 4 global automaker’s investor day that despite growing pressure from automakers like China’s BYD and Chery, Stellantis will remain “among the leaders of this market in terms of profitability.”
The company confirmed that its long-term commitment to double-digit profit margins on its adjusted operating income (AOI) was intact despite market headwinds.
Stellantis’ investor day came a day after the European Union, one of the Franco-Italian carmaker’s largest markets, said it would impose extra duties of up to 38.1 per cent on imported Chinese electric vehicles from July. Europe’s action came less than a month after Washington quadrupled duties for Chinese EVs to 100 per cent.
Beijing criticized the EU tariffs on Thursday as protectionist behavior and said it hoped the European bloc would correct its “wrong practices.”
Stellantis shares closed down 2.8 per cent, in line with other European auto stocks due to the uncertainty over China’s tariff response.
Tavares, who previously criticized EU tariffs on imported Chinese cars as simply hiding Europe carmakers’ lack of competitiveness, said Stellantis would stick to its “asset light” strategy in China, mainly focused on exporting to the country rather than manufacturing there.
“What is clear is that we don’t want to be defensive,” he said on Thursday, referring to tariffs on Chinese cars.
“Our strategy that remains an asset-light strategy is about making sure that we are ourselves offensive and surfing the wave of the Chinese offensive,” he added during a presentation at the investor day in Auburn Hills, Michigan, outside Detroit. “Our asset light strategy in China is much more robust than that of many of our competitors.”
As part of its focus on costs, Tavares said synergies from the 2021 merger between Fiat-Chrysler and Peugeot maker PSA that created Stellantis now amount to €8.4-billion ($9-billion) a year, more than double than initially targeted.
He added that “at least” two of the company’s U.S. plants needed “significant turnaround,” but he declined to name them. Officials with the United Auto Workers union, which represents hourly workers in U.S. plants, could not immediately be reached to comment.
Paul Waatti, director of industry analysis at AutoPacific, said Stellantis’ leadership focused on aggressive goals, hinging on many factors falling into place.
“Still, the momentum in meeting previously announced initiatives and its ability to adapt to the rapidly changing landscape suggests it remains on course,” said Waatti, who attended the presentation.
As part of its strategy, Stellantis has bought a 21 per cent stake in Chinese automaker Leapmotor, and formed a venture that allows the European automaker to sell and manufacture Leapmotor’s vehicles outside China. Stellantis leads the JV with a 51 per cent stake.
“There is a very strong appetite for that company to grow overseas,” Tavares said, adding Stellantis has the flexibility to allocate Leapmotor car production throughout its wide manufacturing footprint to adapt to tariff decisions.
The automaker on Thursday confirmed its forecast for 2024 and said it would target the upper range of its 25 per cent to 30 per cent dividend payout policy in 2025 versus the 25 per cent paid in recent years. It said it would reward shareholders with at least €7.7-billion through dividends and buybacks this year.