Stellantis Italy car production slumps in government setback

Overall production of Stellantis NV cars and light commercial vehicles in the first six months totalled 303,510, down 25% versus the year-earlier peri
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Stellantis
File photo: Stellantis is expected to produce around 500,000 vehicles in Italy in 2024, well below the 751,000 in 2023. (AP)
Stellantis
File photo: Stellantis is expected to produce around 500,000 vehicles in Italy in 2024, well below the 751,000 in 2023.

Stellantis NV’s Italy-based car production dropped 36% in the first half, as a delay in electric-vehicle subsidies promised by the government exacerbated a slowdown in the demand for electric vehicles.

Overall production of cars and light commercial vehicles in the first six months totaled 303,510, down 25% versus the year-earlier period, Ferdinando Uliano, the secretary general of auto workers’ union Fim-Cisl said in a statement Monday.

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If the trend continues, Stellantis will produce roughly 500,000 vehicles in Italy this year, well below the 751,000 in 2023, according to the union. The impact is sharpest at the company’s plants at Melfi and Mirafiori, the latter of which saw first-half production plunge 63%, Uliano said.

The figures mark a setback for Prime Minister Giorgia Meloni’s efforts to boost auto production in the country to 1 million vehicles by 2030. The government clashed for months with Stellantis over its plans to cut jobs and move production to cheaper sites outside Italy.

Stellantis shares were little changed in afternoon trading in Milan on Monday.

When asked about the declining output at Stellantis on Monday, Industry Minister Adolfo Urso threatened to redirect EV subsidies next year if the company doesn’t bolster local production.

“Incentives for the next few years will be directed differently, largely to support production investments in our country’s automotive sector," should output at Stellantis not increase, the minister said.

Tensions between the company and the government have forced Stellantis Chief Executive Officer Carlos Tavares to rename an Alfa Romeo model produced in Poland, and to remove Italian flags from Fiat Topolino cars assembled in Morocco.

Shared Goal

Tavares said in February that his firm shared the target of 1 million Italian-made cars by 2030 — or even sooner if possible. Still, the CEO has been overhauling Stellantis’s industrial footprint with stringent cost reductions in Italy, France and the US at a time governments are looking to protect local industries put at risk by the shift to EVs. Tavares also blasted Meloni’s efforts to attract a Chinese car manufacturer to Italy to make up for lost Stellantis production.

“Stellantis Italia is fully aware of the impact that the trend of the Italian, and more generally European, market is having on national production, with particular reference to electric vehicles and, in the case of Mirafiori, at the 500e," the company replied in a statement.

Stellantis Chief Financial Officer Natalie Knight in April warned that slowing demand in Europe would continue to squeeze margins before improving in the second part of the year.

The carmaker must show “flawless execution in the second half and management will no longer be able to draw solely on the cost-cutting theme, which is clearly needed but likely insufficient," Oddo BHF analyst Michael Foundoukidis wrote in a note on Monday, trimming estimates for the company and cutting his price target on the stock to €25 from €30.

First Published Date: 09 Jul 2024, 07:50 AM IST
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