STLA posts massive profits: Diving into the report

Stellantis posted record profits for the first half of the year, with adjusted earnings before tax and interest rising by 44% to $12.7 billion. North America, which is dominated by the former Chrysler brands, was responsible for nearly half of all sales, and had a record margin of 18.1%. Overall, Stellantis’ margin rose from 11.4% in the first half of 2021 to 14.1%. In North America, it hit a record 18.1%.

Stellantis financials - earnings - dollars

The high profits came even though semiconductor shortages and other parts issues cut production; unit sales were 7% lower than in H1 2021, ending at 2.93 million. The cars Stellantis did sell, it was able to sell at higher prices.

CFO Richard Palmer noted that Stellantis sold more electric vehicles in Europe than Tesla, and is only second to Volkswagen—which was pushed into electrics by a court settlement over diesel emissions fraud. Under “accelerating electrification strategy” was a note that the Windsor plant will “produce vehicles on STLA Large” from 2024. In Europe, the Fiat 500 is the best selling BEV in Germany and Italy, while the Peugeot e-208 is the best selling BEV in France. The company promises a 400 km WLTP range for its subcompact BEVs “from early 2023.”  The first Jeep BEV, incidentally, is to be launched in early 2023.

Jeep BEV

In the first half, Stellantis had five vehicles among the EU ’s top ten—the 208, Corsa, C3, Panda, and 500. The Grand Cherokee 155,000 sales in the first half, a number not seen since 2000; 21,000 of those sales were outside the U.S. The Wrangler 4xe is the best selling PHEV in the United States with 19,000 H1 sales; Pacifica was the second best selling PHEV in the U.S., with 8,000 H1 sales. Ram his its highest ever U.S. average transaction price, of $57,000, while the ProMaster hit its best every U.S. market share at 18.2%. Charger managed a 53% share of the total U.S. full size sedan market, according to Stellantis (though they lumped Challenger into that heading so it may not be accurate).

In the Middle East and Africa, a 15.5% margin hit a record, and market share was up by .2% to 11.9%. In South America, the 13.9% margin also hit a record; Fiat was the best selling brand in the region. In China, India, and Asia-Pacific, the margin was 13.4%.

Palmer also said that inflation was not a major worry, as these costs could be passed to customers.

The strong results were aided by increases in actual selling prices and foreign exchange advantages. Palmer said around $5.9 billion of the profit was due to higher transaction prices and around $500 million was due to foreign exchange advantages. Free cash flow was around$5.4 billion, with synergies claimed at around $3.2 billion. The company was the market leader for commercial vehicles in both the European Union (EU30) and South America, claiming 33% and 31% shares in the first half.

For those figuring out which brand is in which bucket:

  • Jeep = Global SUV
  • Chrysler, Ram, Dodge = American
  • Peugeot, Opel, Vauxhall = Upper Mainstream
  • Citroën, Fiat, Abarth = Core Affordable and Aspirational
  • Premium = Alfa, Lancia, DS
  • Luxury = Maserati

Looking forward, STLA said its outlook for a double digit margin continued, but it expects that Enlarged Europe will shrink by 12% and North America will shrink by 8% in sales.

Analysts believe that the chip shortage is easing, and a bill recently passed by the Senate is supporting higher U.S. production of automotive semiconductors.

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