Stellantis faces brands dilemma as it searches for new CEO

By Giulio Piovaccari

MILAN (Reuters) - As Stellantis chairman John Elkann interviews CEO candidates, deciding how many of the automaker's 14 brands have a viable future is a significant priority.

The French-Italian company's sprawling portfolio - the largest among its peers, which mostly focus on one or two brands - reflects its origins in a 2021 merger of Fiat-Chrysler and Peugeot owner PSA. Shrinking it could reduce complexity and allow some marketing, development and sales functions to be merged.

But each brand - from bestsellers like Jeep, Ram and Peugeot to struggling DS, Lancia and Alfa Romeo - has its fans, making which to drop a difficult choice.

In Europe, for example, where Stellantis is the second-largest carmaker after Volkswagen, its top-selling Peugeot marque had a market share of just 4.9% last year, or eighth position overall.

Low consumer recognition of the Stellantis corporate name, unlike rivals such as VW or Toyota, is another handicap.

A source familiar with Elkann's thinking told Reuters the topic was a priority, and that any applicant for chief executive without an idea about the brands "is not the right candidate".

Former CEO Carlos Tavares often said traditional automakers faced a "Darwinian era" where the weakest would fail - while insisting all Stellantis' brands had a future.

When Tavares was forced out in December, Elkann moved fast to rebuild investor confidence hurt by slumping sales and profit margins in the U.S. market, traditionally its most profitable, with the Jeep, Ram, Chrysler and Dodge brands.

The world's fourth-largest carmaker globally by sales has performed less well in Europe, while it closed a Jeep-making joint-venture in China almost three years ago and has no plans to push for a relaunch as opportunities there recede.

The new CEO must "be ready to take strong decisions", said Fabio Caldato of Acomea SGR, which owns Stellantis shares.

    "If I am not thinking with my heart, but as an investor, I would see it as very positive that the new CEO is determined to review the brand portfolio," he said.

Brands seen by analysts as vulnerable to a portfolio reshuffle include premium marques Alfa Romeo, DS and Lancia. Dodge and Chrysler are seen as survivors despite a less than stellar performance, as they have U.S. driver recognition and appeal to specific market segments.

Automakers have traditionally dropped famous brands only reluctantly, as when GM axed Saturn and Pontiac and Ford its Mercury nameplate during the late 2000s recession.

In a statement to Reuters, Stellantis said each of its brands had plans for new products and that recent organizational changes were aimed at supporting them.

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

"MAGIC WAND"

A Stellantis source said the portfolio's problems are known internally, but that individual brands' popularity in particular countries or segments meant it was not obvious which to cut.

Jeep and Ram are Stellantis' U.S. best sellers, while Chrysler - now largely confined to the Pacifica minivan - and Dodge sold less than 150,000 units apiece in the country last year. Dodge's product lineup has dwindled to one muscle car, the Charger, along with a sporty crossover and one SUV.

Jeep accounted for at least 15% of Stellantis' global sales in 2024, according to Reuters calculations, and Chrysler and Dodge around 3% each.

    "If I were to have a magic wand ... I'd probably say Jeep should absorb Chrysler and Ram should absorb Dodge," said Erin Keating of research firm Cox Automotive.

"But you're not saving a ton of money," she added, as the four "each have their own brand equity", complement each other in terms of range and share the same dealers.

Stellantis was fifth in the U.S. market by sales last year, with an overall share of 8.1%, losing the No. 4 spot to Honda after price rises cost it clients, leading to the shock profit warning that precipitated Tavares' exit. Jeep ranked 11th as a single brand, with a market share just below 4%.

    Keating said the company's focus now should be getting pricing back into line with what customers are willing to pay, a view also expressed by U.S. dealers.

"Let's figure out a way to build those iconic brands back," said David Kelleher, who has a Chrysler-Dodge-Jeep-Ram store outside Philadelphia.

EUROPEAN CHALLENGE

Europe, where Stellantis - slow to electrify - faces stringent carbon emissions rules and more Chinese competition, could be a bigger challenge.

   "It would be a problem if Stellantis closed brands," said dealership owner Tony Fassina, who sells Fiats and Alfa Romeos in Milan. "It would mean losing sales for sure."

Marco Santino at consultancy Oliver Wyman said Stellantis marques such as Peugeot and Opel overlap in Europe's mass-market segment, while it is struggling in the premium market.

Europe-focused Alfa Romeo, Lancia and DS each took only a 0.3% market share in the region in 2024, far behind rivals including Audi and BMW. In comparison, Peugeot made up a fifth of the company's global sales.

Alfa could become a niche sport brand as the fanbase for its cars ages, Santino suggested. Any broad repositioning to revive the premium marque "you need to do ... from scratch".

Stellantis aims to launch about 20 new or updated models between late 2024 and 2025, mostly EVs and hybrids including the Citroen C3, expected to be the most affordable European-made EV.

Its JV with Leapmotor, sometimes described as Stellantis' 15th brand, under which it can sell, import and manufacture Leapmotor's EV models outside China, could be a further boost to electrification.

Fiat, Stellantis' global bestseller, is popular in emerging markets such as Brazil or Turkey, and in the European city car segment with the 500 model. It could be focused on affordable models, Santino said, while another brand could shift to focus on EVs.

"Markets are changing fast and less predictably than we thought," Santino said. "Maybe not yet, but within a few years, the time will be ripe for Stellantis to close some brands."

(Additional reporting by Nora Eckert and Kalea Hall in Detroit, Alessandro Parodi in Gdansk; Editing by Catherine Evans)