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As Stellantis posts 70% profit plunge, fresh inventory data suggests U.S. price cuts may be working
2025-02-28 06:08:17.639 GMT
As Stellantis posts 70% profit plunge, fresh inventory data suggests U.S.
price cuts may be working
By Ryan Hogg
(FORTUNE)
With the dust settling on a December boardroom scuffle that resulted in the
ousting of its CEO and subsequent strategy overhaul, Stellantis on Wednesday
offered investors a fresh reminder of the challenges that lie ahead in the
U.S. for the embattled European automaker.
Stellantis reported a 70% fall in profits to €5.5 billion ($5.7 billion)
alongside a 17% fall in 2024 sales revenue, driven by a sharp decline in
demand in the U.S. as drivers walked away from the group owing to price
increases.
In response, Stellantis last year went on a strategy shift that included
slashing prices for its U.S. brands: Ram, Jeep, and Chrysler. According to a
group using AI to track the impact of the latest price shifts, the plan may be
yielding results.
CoPilot operates an AI agent that helps shoppers by tracking dealership prices
and inventory across the U.S. As a result, the tool has proved useful in
tracking supply and demand trends for carmakers selling in the States.
The group measured the price of Ram, Jeep and Chrysler cars across the U.S.,
in addition to their market days supply (MDS), a figure measuring the amount
of days it takes for models to sell once they arrive at a dealership.
CoPilot’s data suggests the average price of a Ram has fallen 9% to $60,352 in
the 12 months to February, while its MDS in that time has declined 23% to 106
days.
A new Jeep has fallen in price by 12% to an average of $47,691 while its MDS
fell 18% to 111 days. The standard Chrysler, meanwhile, has fallen in price by
5% to $44,932.
The MDS for Chryslers in that time has fallen 47% to 94 days.
The figures are encouraging, and offer an initial suggestion that Stellantis’s
price-cutting strategy is working to shift its mammoth inventory backlog. In
January, Stellantis reported it had been successful in reducing U.S. inventory
by 100,000 cars.
“They've had big sales in January and particularly February, which is starting
to clear out the inventory overhang,” CoPilot CEO, Pat Ryan, told Fortune.
“It's clearing out the inventory backlog. It's getting rid of the overhang,
which has an interest cost implication for the U.S. dealers, and it's getting
them down to a healthier inventory level.”
The merger between Fiat-Chrysler and the PSA Group that formed Stellantis has
caused a rupture in the group’s U.S. market.
Under the leadership of former CEO Carlos Tavares, Stellantis hiked prices in
a premiumization push, encouraged by macroeconomic factors like low interest
rates and government policy that enhanced spending, namely stimulus checks.
The carmaker’s relationship with dealers in the U.S. soured as a result of
these price rises, as drivers proved unwilling to match the value Stellantis
was attributing to its cars.
Equity research firm Bernstein said in October that Stellantis had a
“misplaced belief in its own pricing power” after speaking to dealers who said
the carmaker had lost touch with its core customer base.
The figures reported by CoPilot suggest Stellantis, nearly three months after
parting ways with Tavares, is starting to heal those ruptures.
According to CoPilot, Stellantis is now competing on a price basis with other
carmakers—the average price of a Stellantis car, at $48,953, is on par with
the average. However, MDS for all its brands is still well above the market
average of 78 days.
The group now faces two glaring questions, according to CoPilot’s Ryan: how
far can inventory fall, and how sustainable are Stellantis’s price cuts?
“The problem is going to be, are these new prices—which appear to have found a
market—are these new prices sustainable?” Ryan asks.
“It's one thing to clear out excess inventory, it's another to say: ‘Can you
be a profitable dealer with a sufficient return as a public company at those
prices?’”
This story was originally featured on Fortune.com
2025-02-28 06:08:17.639 GMT
As Stellantis posts 70% profit plunge, fresh inventory data suggests U.S.
price cuts may be working
By Ryan Hogg
(FORTUNE)
With the dust settling on a December boardroom scuffle that resulted in the
ousting of its CEO and subsequent strategy overhaul, Stellantis on Wednesday
offered investors a fresh reminder of the challenges that lie ahead in the
U.S. for the embattled European automaker.
Stellantis reported a 70% fall in profits to €5.5 billion ($5.7 billion)
alongside a 17% fall in 2024 sales revenue, driven by a sharp decline in
demand in the U.S. as drivers walked away from the group owing to price
increases.
In response, Stellantis last year went on a strategy shift that included
slashing prices for its U.S. brands: Ram, Jeep, and Chrysler. According to a
group using AI to track the impact of the latest price shifts, the plan may be
yielding results.
CoPilot operates an AI agent that helps shoppers by tracking dealership prices
and inventory across the U.S. As a result, the tool has proved useful in
tracking supply and demand trends for carmakers selling in the States.
The group measured the price of Ram, Jeep and Chrysler cars across the U.S.,
in addition to their market days supply (MDS), a figure measuring the amount
of days it takes for models to sell once they arrive at a dealership.
CoPilot’s data suggests the average price of a Ram has fallen 9% to $60,352 in
the 12 months to February, while its MDS in that time has declined 23% to 106
days.
A new Jeep has fallen in price by 12% to an average of $47,691 while its MDS
fell 18% to 111 days. The standard Chrysler, meanwhile, has fallen in price by
5% to $44,932.
The MDS for Chryslers in that time has fallen 47% to 94 days.
The figures are encouraging, and offer an initial suggestion that Stellantis’s
price-cutting strategy is working to shift its mammoth inventory backlog. In
January, Stellantis reported it had been successful in reducing U.S. inventory
by 100,000 cars.
“They've had big sales in January and particularly February, which is starting
to clear out the inventory overhang,” CoPilot CEO, Pat Ryan, told Fortune.
“It's clearing out the inventory backlog. It's getting rid of the overhang,
which has an interest cost implication for the U.S. dealers, and it's getting
them down to a healthier inventory level.”
The merger between Fiat-Chrysler and the PSA Group that formed Stellantis has
caused a rupture in the group’s U.S. market.
Under the leadership of former CEO Carlos Tavares, Stellantis hiked prices in
a premiumization push, encouraged by macroeconomic factors like low interest
rates and government policy that enhanced spending, namely stimulus checks.
The carmaker’s relationship with dealers in the U.S. soured as a result of
these price rises, as drivers proved unwilling to match the value Stellantis
was attributing to its cars.
Equity research firm Bernstein said in October that Stellantis had a
“misplaced belief in its own pricing power” after speaking to dealers who said
the carmaker had lost touch with its core customer base.
The figures reported by CoPilot suggest Stellantis, nearly three months after
parting ways with Tavares, is starting to heal those ruptures.
According to CoPilot, Stellantis is now competing on a price basis with other
carmakers—the average price of a Stellantis car, at $48,953, is on par with
the average. However, MDS for all its brands is still well above the market
average of 78 days.
The group now faces two glaring questions, according to CoPilot’s Ryan: how
far can inventory fall, and how sustainable are Stellantis’s price cuts?
“The problem is going to be, are these new prices—which appear to have found a
market—are these new prices sustainable?” Ryan asks.
“It's one thing to clear out excess inventory, it's another to say: ‘Can you
be a profitable dealer with a sufficient return as a public company at those
prices?’”
This story was originally featured on Fortune.com
