Jeep, Dodge-maker Stellantis’ profit slides as Detroit Three strikes bite

Global auto giant Stellantis on Thursday reported a 10% year-on-year fall in profit in the second half of 2023, as six-week strikes at the so-called Detroit Three automakers hampered production in the group’s North American profit epicenter.

Adjusted operating income came in at 10.2 billion euros ($10.96 billion) for the July-to-December period, down from 11.3 billion euros for the same period in 2022.

However, the earnings proved more resilient to the impact of industrial action than the market had expected, with AOI exceeding a forecast of 9.54 billion euros by analysts polled by Reuters. Stellantis shares were around 5% higher in afternoon trade in Europe.

In North America, the group’s AOI margin fell 100 basis points year on year to 15.4%, which Stellantis said in its earnings report was “due primarily to production disruptions and costs related to new labor agreements.”

Stellantis reported in late October that labor strikes by the United Auto Workers union, which ran for six weeks from Sept. 15 and also targeted General Motors and Ford Motor, cost the company $3.2 billion in revenue through October.

The company, which owns household names including Jeep, Dodge, Fiat, Chrysler and Peugeot, reached an agreement with the UAW in late October that will see the company invest $18.9 billion in the U.S. by 2028. Stellantis workers stateside ratified the deal, which includes at least 25% wage increases and the reopening of an idled plant in Illinois, on Nov. 17.

Aside from the UAW strike, CEO Carlos Tavares on Thursday admitted Stellantis’ U.S. operations were not “stellar in 2023.”

The company was the only major automaker to report a decline in U.S. sales last year; its market share dropped below 10%; and Hyundai, including Kia, outsold Stellantis for the first time ever.

“I’m quite confident that 2024 will be better than 2023,” Tavares told the media Thursday, adding the company is giving North American executives more leeway regarding marketing and incentives to promote sales. “Let’s see one year down the road, [if] we can meet again and say it works.”

The company’s second-half industrial free cash flow was down 24% from the same period last year at 4.2 billion euros, while revenue was also down slightly at 91.2 billion euros.

Despite the hit from the six weeks of industrial action, the auto giant reported strong earnings for 2023 as a whole – marking the company’s third consecutive year of record results since it was formed by a merger of Fiat Chrysler and PSA Groupe in January 2021.

For 2024, Stellantis said it expects “a minimum commitment of double-digit adjusted operating income (AOI) margin in 2024, as well as positive industrial free cash flow, despite macroeconomic uncertainties.”

A major part of the company’s plans this year involves all-electric vehicles, despite slower-than-expected demand in many regions. There has been growing concern in the U.S. about EVs, with several automakers adjusting plans to reduce spending on the products.

Tavares said the company remains committed to its previously announced plans of investing at least 30 billion euros in EVs and supporting technologies through 2025.