Stellantis declares bankruptcy in China, with $1B in debts

https://www.italpassion.fr/en/stellantis/stellantis-declares-bankruptcy-in-china-with-1-billion-in-debts/

by teleforce • 1 year ago

104 124 1 year ago

I am an automotive components supplier and I’ve always wondered how automotive giants are staying open or even turning any profit at all (1)

Between this, Nissan and a dozen others, I guess there’s a lot of running-on-debt going on.

1: it’s so difficult with the latest round of laws making a very high level of ADAS mandatory. Huge spend in R+D, particularly software and vertical integration, and then again huge spend on the physical car electronics.

deepsun• 1 year ago

New cars prices doubled in the last 20 years. If anything, I would expect them to make record profits actually.

thrwaway55• 1 year ago

This is honestly tighter then you might think accounting for inflation. A 2000 1$ is 1.87$ today. 2005 seems like they should be doing a lot better since it's 1.65$ but it's not nearly as gangbusters as this comes across.

epolanski• 1 year ago

That doesn't cope with less vehicles being sold overall and inflation, even if margins on a single car have never been higher I think (at least in US).

metaphor2• 1 year ago

New cars prices doubled in the last 20 years.

In the US, authoritative data sources[1] suggest otherwise.

[1] https://fred.stlouisfed.org/graph/?g=1KzJF

adrianN• 1 year ago

So prices have roughly kept up with inflation?

lynx97• 1 year ago

That is called inflation. Almost everything doubled its price in the last 20 years. My rent, for instance...

mrighele• 1 year ago

At least in Europe, car are more expensive to make than 20 years ago, even inflation adjusted, as the EU keeps adding new and stricter regulations.

* Lower emissions, requiring more expensive engines.

* Making cars easier to recycle (but more expensive to build)

* Adding mandatory accessories for safety reasons. Here you can find an example of what that has been recently added. [1]. Nice stuff, but it doesn't come for free.

[1] https://autovista24.autovistagroup.com/news/what-is-the-gene...

dmix• 1 year ago

It helps markets like US and Canada have essentially banned competition from Chinese car makers and tightly controlled automotive trade in general from many other countries.

rafaelmn2• 1 year ago

EU also tariffed Chinese cars out of the market.

jandrewrogers• 1 year ago

They aren’t turning a profit on the hardware in many cases. They hope to make it up by selling financing and data from the platforms.

arresin• 1 year ago

I really don’t want my car to be a “platform”.

rsynnott6• 1 year ago

Astonishingly, Stellantis (the global business, not the Chinese subsidiary) is profitable, somehow. Pays a dividend, and everything.

v5v35• 1 year ago

2024

revenue down 17% Net profit down 70% at a meagre 5billion.

https://www.stellantis.com/en/news/press-releases/2025/febru...

They need to spend billions on an ongoing basis in R&D

zihotki3• 1 year ago

Past performance is not indicative of current/future. See https://s3-prod.autonews.com/2024-09/Dealer%20letter%20to%20... for more details why it was profitable in previous few years.

WhereIsTheTruth2• 1 year ago

Western elites are finding out how bad of an idea it was to betray their own people for a quick buck, returning home will be difficult

ako2• 1 year ago

Assuming you’re referring to CEOs outsourcing production to china to reduce costs? I doubt they had any real alternative with consumers always buying the cheapest option. Either move production overseas, or loose all sales to companies that do produce at lower cost. But you say, consumers don’t earn enough to buy locally produced products. True, but raising salaries won’t fix it, as it will make local manufacturing even more expensive. The whole system is not really sustainable.

WhereIsTheTruth2• 1 year ago

https://www.lemonde.fr/en/opinion/article/2024/04/17/the-exo...

To end up going bankrupt with 1B in debts, the problem is elsewhere

atom_arranger• 1 year ago

Tesla was built on American R&D and manufacturing and is competitive in terms of cost and features. It’s probably easier to not innovate and go for almost guaranteed short term profit by relocating existing manufacturing processes though.

I don’t think there was no alternative. I think it was an easier, more short term, and more selfish (in relation to fellow countrymen and descendants), choice.

Thorrez• 1 year ago

It sounds like the Chinese plants were created to sell cars in China. Is that betraying their own people?

SV_BubbleTime5• 1 year ago

Automotive EE here…

If you would have gone back twenty years and been like “hey, you know how you think the Germans are running ChryslerDodgeJeep into the ground? … just wait until you see what the Italians do… and then the French right after that!!”

I wouldn’t have believed it. Turns out the Germans really weren’t so bad.

Honestly, Stellantis is making the wrong move at every turn and one possibility that makes sense is stripping the company… or some elaborate revenge plot… because it seems like they speedrunning destruction.

senectus12• 1 year ago

how much of this is China eating their lunch.. forcing them into poor decisions?

FirmwareBurner7• 1 year ago

Another (former)auto EE here. Their own poor decisions resulted in China eating their lunch. They couldn't stop shooting themselves in the foot, high on their own arrogance of European hundred year old industry superiority. Man, I wish I had a way to digitally export my memory of the townhall meeting in 2014 of a German luxury brand exec laughing on how bad Chinese EVs were. I bet, they aint laughing now, that's for sure.

Germans and Italians had a multi decade lead on EV motors, battery, self driving and electronic tech over China (why I entered the industry) but they shelved it because they wanted to sell more diesel engines, outsourced all R&D to the lowest bidder to save costs and invest all profits into share buybacks or dividends instead of R&D (why I exited the industry).

Are the German and Italian executives in charge of those decisions being held accountable for the mess they created, or are the enjoying a golden retirements/parachutes while thousands of workers are now being laid off and governments forced to spend taxpayer money to bail out their mistakes and rescue what's left to prevent further layoffs? What were the lavishly paid EU politicians and regulators watching over in that time?

To me this is another nail in the western industry players falling victims to their own short sighted greed coffin. If only there have been any past examples in history to serve as cautionary tales, cough, Kodak, cough. /s

SV_BubbleTime5• 1 year ago

IMO very little.

China can’t sell cars in the US or Europe markets well. Not only for political reasons, but the Chinese cars just don’t pass regulations and the Chinese aren’t very interested in trying.

The one exception to that is Volvo. Which you may think is a European brand, but it is 100% Geely Automotive. A Chinese company.

Interestingly, the seemed to buy Volvo to push for lobbying with a good name just as much if not more than sell cars and trucks.

crinkly• 1 year ago

Stellantis are doing a wonderfully disastrous rebrand thing at the moment after finishing a previous one.

They rebranded the local dealership and service centre here “stellantis and you” at great cost. No one actually seems to know who the hell stellantis is or which car brands they own or sell.

That sort of stuff always feels like a death spiral.

The previous disaster was splitting lines. I had a Citroen which I was told was not a Citroen but a DS. Turned out it was both and put together with left over parts from both ranges. This caused all sorts of service problems.

barkingcat• 1 year ago

What is an EE in automotive parlance?

alextingle• 1 year ago

Electrical Engineer?

Animats6• 1 year ago

This isn't a China problem. This is a Stellantis problem. Read the infamous letter from the organization of Stellantis dealers to the CEO.[1] That's from last September. The CEO was fired, but it didn't help much.

What's left of Chrysler is one minivan line. That's it.

[1] https://s3-prod.autonews.com/2024-09/Dealer%20letter%20to%20...

mlsu• 1 year ago

What is the 2023 mistake that he is referring to?

Animats6• 1 year ago

The usual thing when some finance guy is in charge. Cut costs, raise prices, increase short term profits, defer the collapse until later. The collapse came within a year. But for one year, Tavares was the highest paid CEO in automotive.

Wikipedia: "Under the leadership of Tavares, Stellantis faced mounting criticism over its cost-cutting strategy, declining sales, and strained relationships with key stakeholders. Tavares implemented aggressive restructuring measures, including workforce reductions and tight control over product development, which some analysts blamed for delays in new model launches and weakening brand performance, particularly in North America.[45] U.S. dealers expressed concern about rising inventories and brand mismanagement, while the United Auto Workers criticized the company over job cuts and halted investment plans. Stellantis reported a 70% drop in net profit in 2024, with global shipments and U.S. market share declining significantly.[48] Amid internal friction with the board and worsening financial performance, Tavares resigned in December 2024, two years before his contract was set to expire."

recursivecaveat• 1 year ago

Raising vehicle prices beyond what customers would pay it seems: https://www.cnn.com/2024/12/01/business/stellantis-ceo-carlo... They alude to it in the letter with the talk of market share.

RandomThoughts3• 1 year ago

The letter is the problem. The US companies are sick and completely refused to take the necessary steps to reduce their costs out of sheer hubris.

That’s Stellantis issue. American car manufacturers are irredeemable. It was a far better companies before the merger. Tavares was right. He was cutting costs which shouldn’t exist - Chrysler is an extremely ineffective company compared to PSA - and is investment strategy in electric was great. I was so happy when Tavares started talking about losing the dead weight and selling Chrysler. It’s a shame the board didn’t go with him and that he was sabotaged by the frankly incompetent management in the North American branch. The company now has an utterly stupid strategy.

Anyway, the issue in China is the GAC had control of the JV, a terrible idea of Fiat Chrysler which the company will now have to deal with. I’m still sour PSA had to merge these idiots.

tibbydudeza• 1 year ago

The Silverado will save the business - the problem is more the Fiat side of the business - Peugeot still makes good stuff - they would have been better off merging with Renault.

cyp0633• 1 year ago

Stellantis brands sales in China have been in decline long before the emergence of EVs. There is indeed some existence of Stellantis in China via Leapmotor (laugh).

speedgoose3• 1 year ago

I am not an automotive industry advisor, but I guess this could have been avoided if the group strategy wasn’t about maximising short term profits and manufacturing mediocre cars.

v5v35• 1 year ago

The West indicated to their companies that ICE cars were being phased out by 2030 and set incentives and penalties. (To complete with China ev).

So the car companies rushed out EVs, panic spent on R&D. But without subsidies, most buyers didn't want them, as the charging infrastructure wasn't there (many people don't own garages or driveways or have 30 mins to sit in a charging point).

Now the west is delaying their previous targets to ban ICE cars.

speedgoose3• 1 year ago

China has now a strong lead in EVs while Stellantis did the bare minimum by manufacturing bad EVs sharing a platform with fossil cars, and selling them at premium prices.

I don’t know why Stellantis didn’t get the memo. Other car companies for sure did.

eptcyka4• 1 year ago

Very rarely does one need to sit 30 minutes at a charger, without doing anything else.

rsynnott6• 1 year ago

I'm always a little shocked that Stellantis keeps going; it's pretty much a collection of all the car brands where, on seeing one, people go "wait, they still make those?!"

That said, whatever about the Chinese subsidiary, it is, somehow, still profitable!

yourusername• 1 year ago

PSA (Peugeot/Citroen) seems viable. The rest does seem like a collection of car makers with a bad reputation and a limited/outdated model range.

noiwillnot• 1 year ago

Fiat seems doing well in Southern Europe.

mattmaroon2• 1 year ago

RAM and Jeep are pretty strong brands in the US.

wiether2• 1 year ago

I guess you are from the US?

In Europe they probably make a quarter of the cars we see on the roads (Peugeot, Citroën, Opel, Fiat...)

rsynnott6• 1 year ago

Europe, specifically Ireland. Very rarely see new Fiats or particularly Opels these days.

aussieguy1234• 1 year ago

I guess this shows what happens if you're a car company and don't embrace new technology (electric cars specifically) fast enough.

zihotki3• 1 year ago

3-4 years ago I was looking forward to the Stellantis's hybrid platform. These days I'm still looking forward... Constant supply issues (1), delays with release of new models, sky high prices, focus on luxury market section make Stellantis auto's hard to pick.

Speaking from NL perspective, the market here is well saturated with EV. But a lot of people are hesitating to get one due to charging issues - you simply can't charge the auto if there is no charger on a street or they are not available. Electric grid is also very saturated in urban areas and electricity is one of the highest in EU (€ 0,32 per kWh including energy tax and 21% VAT for a consumer). For many people hybrids make more sense than EVs.

(1) https://moparinsiders.com/stellantis-hybrid-push-triggers-pr...

kungito• 1 year ago

I just hope they sell off Alfa Romeo who knows what to do with the brand. Who the hell wants Alfa Romeo at BMW prices? The whole history has been selling affordable sport cars. They cancelled Giulietta and don't even plan on having a car in that segment. Tonale and Junior look horrible. The brand DNA all but died

Stellantis declares bankruptcy in China, with $1B in debts

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