Stellantis (STLA.US) restructures its brand investment logic: resources focus on profit core.

One of the world's largest automakers, Stellantis (STLA.US), is expected to announce its latest growth strategy plan in May, according to CEO Antonio Filosa. The plan will focus on investing heavily in its core brands Jeep, Ram, Peugeot, and Fiat, with a significant increase in funding for these brands. The super car company, ranked as the fourth largest global automaker by actual sales volume, will outline its latest long-term growth strategy in Detroit, focusing on its most popular and profitable international car brands. Insiders said that all 14 traditional brands under Stellantis' automotive brand portfolio, including Citroen, Opel, and Alfa Romeo, will receive funding to adopt the technologies of the four core brands mentioned earlier; Stellantis has the most number of brands in the global automotive industry. Stellantis will concentrate "most of the investment" on Jeep, Ram, Peugeot, and Fiat, with other brands like Citroen, Opel, and Alfa Romeo also receiving funding, but with a focus on tactical growth in specific countries, regions, or niche markets using the platforms and technologies of the four core brands. This means that the four core brands of Stellantis will receive the main resources, while other brands will receive less but targeted funding, relying on shared technologies to maintain regional value. According to media reports, insiders revealed that low-volume brands that previously received a more equal share of internal investment allocation will continue to be regional or national brands in markets where they have advantages or potential. Overall, Stellantis is striving to regain dominant market share in the US and European markets, facing fierce competition from Chinese car manufacturers in Europe and emerging markets. In February of this year, with the withdrawal of its electric vehicle expansion plan, the company set aside 22.2 billion euros (26.1 billion US dollars) in expenses. Insiders said that this strategic adjustment has received support from major investors, including Stellantis' largest shareholder, Exor. Stellantis was formed in 2021 through a merger between Fiat Chrysler and French manufacturer PSA. Stellantis stated that its strong brand portfolio is a unique advantage and emphasized the combination of "global market operating scale and deep local roots," but did not directly comment on the restructuring plans. With a market value dropping to just 21 billion euros, Stellantis As Stellantis has faced operational and performance growth difficulties in recent years, its valuation has significantly declined, with the current market value being approximately 21 billion euros. This is just slightly higher than the stock market value of US-based electric vehicle startup Rivian (RIVN.US) at 21 billion US dollars, and Stellantis' latest market value is less than half of Volkswagen's (VOWG.DE) total market value a few years ago. Some investors and prominent Wall Street analysts have suggested that Stellantis should close some brands to save money and reduce inefficient operational-related issues; these brands often have overlapping markets, especially in Europe and North America. Brands such as Lancia, DS, Citroen, and Opel have been named as candidate brands. The chart above shows the significant drop in Stellantis' stock price and valuation. However, insiders said that Filosa does not want to go down that route; he became CEO of Stellantis last year, with a major mission to turn the company's fortunes around and believes that these brands still have potential in certain regions or large national markets. Marco Santino, a partner at top global consulting firm Oliver Wyman, said, "If market conditions change, some of these brands may prove useful to the group in the future." He also added that once a brand is completely closed, "it is difficult to resurrect it." The bar chart above shows Stellantis' market share in Europe and the US since 2020. Carlos Tavares, the former CEO of Stellantis who oversaw the massive brand merger, publicly refused to consider closing any brands. But after his departure in December 2024, Chairman John Elkann focused heavily on determining which brands have more viable future prospects. Focus on "truly important brands" Insiders said that Filosa's plan will concentrate investment heavily on Jeep, Ram, Peugeot, and Fiat because these brands have higher sales and stronger profit growth trends and are considered "truly important" brands. The insiders added that his predecessor insisted on allocating overall investment more equally among all brands; however, under the new strategy, Stellantis will now strategically expand Citroen, Opel, and Alfa Romeo, among other brands, in specific countries and niche markets. Insiders said that options for regional brands include using infrastructure platforms and technologies developed by Stellantis' core brands, incorporating internal and external design features and handling adjustments to give them a unique look and feel. Another solution under consideration is rebranding certain models for specific local markets. Earlier this month, there were reports that Stellantis is in deep negotiations with Chinese partner LEAPMOTOR to jointly develop an electrified SUV under the Opel brand. This could be a potential typical case of how regional brands can rely on shared underlying technologies while retaining their individual brand identities. Stellantis may temporarily postpone phasing out brands A senior executive at Stellantis said that the long-term success of the plan cannot solely depend on reducing the brand portfolio but rather on strategically using brands in different markets to increase market share. For a long time, Stellantis has planned to have most of its popular car models use a limited-shared-mode "Multi-energy" platform to support pure electric, hybrid, or gasoline power systems. However, a former senior executive at Stellantis said that this arrangement was originally tailored for a fast pivot to the electric vehicle market, which has not been realized. The picture above shows the Stellantis brand portfolio. Analysts generally believe that Stellantis may eventually divest some brands, although historically, automakers have been reluctant to do so unless there is no other choice, as General Motors Company did in 2008 during its bankruptcy proceedings with Saturn and Pontiac. Senior M&A advisor and former North American brand manager for Alfa Romeo Larry Dominique said that in the short term, Stellantis executives "must focus on those very important brands." He added, "At some point, Stellantis may have to gradually phase out some end-of-life brands. But they will have to make this difficult decision based on the performance of core brands in the future."