July 31, according to the “Financial Associated Press” report, the global fourth largest automaker Stellantis is considering cutting more than 1,200 engineer positions in Europe and the United States. It is also reported that Stellantis will offer a new round of voluntary buyout plans to salaried employees in the United States to cut costs in response to the decline in profits. Stellantis said in a letter to employees that it will offer a voluntary buyout plan to non-union US employees at the vice president level or below in certain functional departments. If the number of employees accepting the voluntary resignation plan is not enough, layoff measures may be adopted.
As of the time of writing, Stellantis has not temporarily responded to the above news, and it is not yet clear the total number of employees affected by this measure.
At present, traditional automakers are facing the transformation to electrification, and layoffs are part of the transformation measures. On the one hand, it can solve the impact on employment during the process of energy and technology transformation, and on the other hand, it can cut costs for enterprises. Stellantis, as the global fourth largest automaker, is no exception.
As early as March this year, Stellantis laid off 400 technical workers and software engineers in the United States, involving 2% of the employees in the relevant departments. Since then, it has also signed a further voluntary layoff agreement with the Italian trade union, and a total of 2,500 people will be laid off in Italy. At that time, Stellantis said that the layoff method was voluntary, mainly targeting employees close to retirement age or willing to accept new career opportunities, and employees could choose to leave voluntarily and receive financial compensation. And earlier at the end of 2023, Stellantis reduced production shifts at the Toledo plant and the Detroit plant in the United States and announced that a total of 3,500 people would be cut at the two plants.
It is understood that the reason why Stellantis will offer a new round of voluntary buyout plans to salaried employees in the United States this time is to hope to cut costs in response to the decline in profits. On July 25, the Stellantis Group publicly announced the financial report data for the first half of 2024. The financial report shows that in the first half of 2024, the net revenue of the Stellantis Group was 85.017 billion euros, a year-on-year decline of 14%, lower than the expected 87 billion euros; the net profit was 5.647 billion euros, a year-on-year decline of 48%, lower than the expected 6.97 billion euros. In addition, in the first half of the year, the Stellantis Group achieved an adjusted operating profit of 8.463 billion euros, and the adjusted operating profit margin was 10%.
Regarding the reasons for the decline in net revenue and year-on-year decline in net revenue, the Stellantis Group said that the former was due to the decline in sales and structural differences; the latter was due to the adverse effects brought by the decline in sales and structural differences as well as foreign exchange factors and restructuring costs.
Stellantis Group CEO Carlos Tavares pointed out that the Stellantis Group’s financial report in the first half of the year was lower than expected, reflecting the challenging industry environment and also reflecting the Group’s own operational problems. In response to the decline in the financial report data in the first half of the year, the Stellantis Group promised to take measures to solve the problems in the North American and other regional markets, including reducing production, and at the same time, no less than 20 new cars will be launched this year. If properly executed, it will bring greater opportunities and achieve profitability in the second half of the year.
In addition to product updates, Carlos Tavares also revealed that some unprofitable brands under the Group may be shut down. He said: “If they are not profitable, the Group will be closed and cannot afford unprofitable brands.” However, the Stellantis Group did not clearly state which brands will be shut down. There is news in the market that the luxury car brand Maserati may become the object of disposal. In this regard, Stellantis said that it has no intention of selling nor intends to merge this department with other Italian luxury car groups. It said in a statement: “Stellantis reaffirms its firm commitment to the bright future of Maserati, which is a unique luxury brand among the Group’s 14 automotive brands.” At the same time, Stellantis also reaffirmed its commitment to the entire product portfolio of Maserati.
Regarding the 2024 annual operating target of the Stellantis Group, the Stellantis Group reiterated that the operating target of “achieving double-digit adjusted operating profit margin in 2024 and positive industrial free cash flow” remains unchanged. The Stellantis official said that it is expected that the above indicators will develop in a favorable direction in the second half of this year, thereby supporting positive industrial free cash flow for the whole year. As for the longer-term development, the Stellantis Group plans to launch 8 new models based on the STLA Large large platform from 2024 to 2026.
In general, due to the decline in market demand and high investment in electrification, automakers including Stellantis are facing considerable pressure. Therefore, many automakers choose to lay off to reduce costs and increase efficiency to deal with the industry winter. As for whether the Stellantis Group can achieve the annual target after many measures, it remains to be seen.
