Stellantis down, Dongfeng deal promoted but doubts over group prospects

(Il Sole 24 Ore Radiocor) - Stellantis down at Piazza Affari on the day the Italian-French group signed a euro 1 billion strategic cooperation agreement with China's Dongfeng Group (Stellantis' share around 130 million) with the aim of expanding their 34-year partnership through the joint production of new Peugeot and Jeep models in China for the Chinese market and for export to other markets.

Although the news is considered positive by analysts, the market is already looking beyond, to future prospects, which show signs of improvement but with results not yet consolidated, and to the industrial plan to be presented on 21 May. "There are no quick or easy solutions. Despite signs of improvement in North America, the rest of the regions, which account for about 60 per cent of revenues, are showing declines in profits. Management is confident about the work done so far and that the foundations have been laid for recovery, but the fear is that further action is needed, especially in Europe,' explain analysts at Hsbc, who confirmed the 'hold' rating, but lowered the price target from EUR 6.5 to EUR 5.5.

As mentioned, however, the news on Dongfeng was well received: "In general, we believe that the agreement with Dongfeng is positive, as it outlines a clearer and more credible strategy compared to the previous asset-light approach," say Intermonte's experts, pointing out that "the financial impact will be limited in the short term, as is natural given the project profile, but the initiative could allow Stellantis to relaunch in the Chinese market and exploit the advantages of a local production base, both in terms of cost and time-to-market speed, also for exports." The recently announced strengthening of the partnership with Leapmotor also goes in this direction. Among other things, according to some Chinese media, Stellantis is in talks with the Chinese of Huawei and Jac Motors to develop new electric models for Maserati. The first model could arrive as early as 2027 in two versions: one with Huawei's Maextro brand for the Chinese market and one with the Maserati brand for international markets. Huawei would provide software, digital dashboards and assisted driving systems, Jac would handle production and Maserati would contribute with design and premium positioning.

"The news does not surprise us in light of other press articles and statements in recent weeks and we consider it realistic. If confirmed, it would accelerate the timetable for the relaunch of Maserati, which has been effectively neglected for too many years (in 2025 it sold only 11,000 vehicles), exploiting the benefits of a shared platform". In the meantime, anticipation is rising for Investors Day on 21 May, where the group will lift the veil on its new strategy for the coming years and give indications - or so the market expects - on the future of the group's 14 brands. CEO Antonio Filosa has repeatedly stressed that they are all fundamental and that they will be enhanced, but some observers believe that there are too many of them and that, at the very least, they need to be 'treated' more efficiently.

According to analysts at Ubs, "next week's meeting is a decisive 'make or break' moment for the group," which will present its new business plan, including financial targets and strategic actions (investments, products and brands, cost reductions) for key regions, particularly North America. "After the major reorganisation in February, our assumption of a positive recovery in the US has so far not materialised to the extent we (and the market consensus) expected and, as a result, Capital Markets Day has become even more crucial to the investment case," says Ubs, according to which "positioning on the stock has become more negative in recent weeks (lower than expected first quarter results in North America, weaker US sales data in April, crisis in the Middle East)."