Stellantis freezes plan to overhaul dealer structure in Europe

(This story has been corrected to clarify that dealers in Austria, Belgium, Luxembourg and Netherlands will still move to the 'agency' model, in paragraph 6)

VERONA, Italy (Reuters) -Stellantis suspended a contested plan to overhaul the legal structures of its dealership network in Europe, its chief for the region said on Tuesday, as the carmaker also prepares to update a plan to revive vehicle production in Italy.

As part of efforts to cut costs and support investments for electrification, former CEO Carlos Tavares launched a plan in 2021 to end previous contracts with European dealers and move towards a new distribution framework based on an "agency model".

Tavares left his post in December.

In an agency model, carmakers take more direct control of sales transactions and prices, while dealers focus on deliveries and servicing and no longer act as the customer's contractual partner.

Many dealers were reluctant to make the change, saying it was compressing their margins on vehicle sales.

Speaking at a dealer's event in Verona, Italy, Imparato said Stellantis was suspending the plan in Europe, with sales networks sticking to the traditional dealership framework, except for Austria, Belgium, Luxembourg and the Netherlands where a transition to the new agency framework was already launched in 2023.

Imparato said Stellantis would soon address requests to the European Union to support auto manufacturing in the region, which he said was complicated by high labor and energy costs and heavy regulation.

Requests will include a EU-wide scrappage scheme to help replace vehicles older than 10 years and public contributions for electric-vehicle battery production in Europe of 40 euros per kilowatt, worth almost half of the total manufacturing costs.

In Italy, Stellantis will soon present an update to the plan it announced in December to increase auto production in the country, Imparato said. He added that "a few things have changed since then", including EU's decision to give automakers three years to comply with emission rules initially set for 2025.

The update, aimed at enhancing the plan for Italy, will include areas such as engines, as well as Stellantis' struggling brand Maserati, he said.

"We will discuss it with the government soon and then we will present it, in June, or even before," Imparato said.

(Reporting by Giulio PiovaccariEditing by Keith Weir and David Gregorio)