Stellantis Faces Rating Downgrade Amid Market Challenges
Stellantis, the multinational automotive manufacturing corporation, has experienced a significant shift in its credit rating. Moody’s Investors Service downgraded the company’s long-term rating from Baa1 to Baa2, positioning it just two steps above junk status. While this decision has stirred considerable attention, it was accompanied by a revision of the outlook from negative to stable.
Did you know? Stellantis was formed in 2021 from the merger of Fiat Chrysler Automobiles (FCA) and the French PSA Group. This merger created the world’s fourth-largest automaker by volume.
Moody’s explained the rationale behind the downgrade in a press release:
The downgrading to Baa2 is due to the expectation that, given the tough conjuncture of the market, a significant recovery of credit indicators, in particular of the margin and free cash flow towards our requirements for the previous category of rating, will be more difficult to achieve.Moody’s Investors Service
Despite closing near equality in recent trading, Stellantis’s stock has seen a year-to-date decline exceeding 24%.
Performance Dip and Strategic Challenges
After several years of robust profitability, Stellantis, the parent company of brands like Jeep, Fiat, and Peugeot, faced headwinds in 2024.The company’s performance was impacted by aggressive measures to reduce inventory and prices in the United States, and also delays in launching new products in Europe. These delays were partly attributed to challenges in transitioning to new multi-energy platforms.
pro Tip: Multi-energy platforms are designed to support various types of powertrains, including gasoline, diesel, hybrid, and electric. This adaptability allows automakers to adapt to changing market demands and regulatory requirements.
The company experienced what it termed a temporary gap
between the cessation of production for older models and the introduction of new ones, which lead to reduced deliveries and revenues.
Future Outlook and Market Dynamics
Stellantis anticipates that the launch of new products will bridge this gap throughout 2025. however, Moody’s suggests that the full benefits of this transition may not be immediatly realized. According to Moody’s:
While recognizing that the company has launched significant measures to restore operating performance, the difficult market context, characterized by a weakening of the macroeconomic framework and by growing commercial tensions (duty, editor’s note), increases the risk of execution and could slow down the expected recovery.Moody’s Investors Service
This assessment underscores the challenges Stellantis faces in navigating a complex and uncertain global market.
Financial Performance in 2024 and Early 2025
The downgrade follows a challenging 2024 for Stellantis, marked by a 17% decrease in revenues and a 70% drop in net profit, alongside a 12% decline in deliveries. The first quarter of 2025 did not bring the anticipated turnaround, with revenues down 14% and deliveries down 9%. Consequently, Stellantis suspended its guidance for the entire year, citing uncertainty related to duties and the macroeconomic environment.
Leadership Transition: Antonio Filosa Emerges as Potential CEO
Currently, Stellantis is under the leadership of an interim executive committee reporting to Chairman John elkann. This transition period began last December, following the departure of Carlos Tavares. Recent reports indicate that Antonio Filosa, 52, the Chief Operating Officer for North America, is a leading candidate for the CEO position. Filosa’s career began in 1999 at Fiat.
Filosa’s potential appointment is particularly relevant given Stellantis’s exposure to the 25% customs rates imposed by the Trump administration. Last year, 58% of the vehicles sold in the United States were assembled locally, while the remainder was imported primarily from Mexico and Canada. Moody’s also noted a decline in profitability in North America, with a negative industrial cash flow of $6 billion in 2024 serving as a further warning sign.
