Stellantis Promise or Puff? – Clean, Safe, Affordable Mobility

Today at the first Stellantis Investor Day in Auburn Hills, Michigan CEO Carlos Tavares presented what he claimed were  nine key strategic differentiators that Stellantis is using “to unlock value and address the disruption and reinvention of the auto industry worldwide.”

“What consumers around the world are looking for is clean, safe and affordable mobility. This is the reason we exist. We are driving a generational shift in technology and a product wave built on multi-energy platforms and flexible operations with above-group profitability in our commercial vehicles business. Together with the activation of our uniquely aligned partnership with Leapmotor, an innovative Chinese new energy vehicle maker, we’re confident we can deliver what customers want while providing strong shareholder returns this year, and beyond,” Stellantis CEO Carlos Tavares.

No matter how nuanced a view you take, Jeep is central to the plan. The China Leapmotor strategy is either daft – given the expanding global trade war with China or dictated by reality. Perhaps more significant in this moment, Stellantis re-affirmed its 2024 financial guidance and capital return plan, which promises double-digit Adjusted Operating Income (AOI) margin and positive industrial free cash flows. Stellantis will provide  ≥€7.7 billion in dividends and buybacks during 2024.

CFO Natalie Knight provided specific observations on first and second-half expectations within the 2024 period. She said the H1 outlook is 10-11% AOI margin, with industrial free cash flows visibly below the prior year period. Significant product launches, cost initiatives and anticipated improvement in working capital together support H2 sequential improvement opportunity in AOI and industrial free cash flow are coming.

Stellantis is also improving its capital plan in several ways:

• Setting target liquidity levels of 25-30% of revenues for the mid-term, shifting focus to capital efficiency and supporting strong shareholder returns.
• The Company will continue to use share buybacks and ordinary dividends to return excess cash to shareholders.
• In 2025, the Company will target the upper range of its 25-30% dividend payout policy, vs. 25% in recent years.