Moody's cuts Stellantis' rating. Waiting for the ceo: Filosa in pole?

Moody's cut Stellantis' long-term rating from Baa1 to Baa2, bringing it just two notches above 'junk'. It doesn't come first, since S&P and Fitch, had anticipated it, on 6 March and 3 April respectively (from BBB+ to BBB, the equivalent of Moody's Baa2). The new downgrade makes noise, even though it is accompanied by an improvement in the outlook, from negative to stable. 'The downgrade to Baa2,' the agency explained in a statement, 'is due to the expectation that, given the difficult market environment, a significant recovery in credit indicators, particularly margin and free cash flow towards our previous rating category requirements, will be more difficult to achieve. The stock closed trading just below par, but since the start of the year the red remains over 24%.

After several years of high profitability, the performance of the manufacturer of Jeep, Fiat and Peugeot (but there are 14 brands in total) in 2024 declined due to aggressive inventory and price reduction actions in the US and delays in the launch of new products in Europe, partly related to difficulties in the transition to the new multi-energy platforms. The group suffered from a 'temporary gap' between the end of production of old models and the arrival of new ones, which reduced deliveries and revenues.

New product launches are expected to close this gap during 2025, but the full benefit of this transition may not be immediate. "While recognising that the company has initiated significant measures to restore operational performance, the difficult market environment, characterised by a weakening macroeconomic environment and rising trade tensions (tariffs, ed.), increases execution risk and could slow the expected recovery," according to Moody's.

The downgrade, in fact, comes after a dramatic 2024. Stellantis reported a 17% drop in revenues and a 70% drop in net profit, while deliveries fell by 12%. The first quarter of 2025 did not mark the expected turnaround: revenues down 14%, deliveries down 9%, and guidance suspended for the full year due to uncertainty over tariffs and the macro environment.

The group is led by an interim executive committee reporting to the chairman, John Elkann, in the transition phase that began last December, when Carlos Tavares left the scene and while waiting for the new CEO. Yesterday, Bloomberg reported that the candidate in pole position is Antonio Filosa, 52, chief operating officer for North America, a career that began in 1999 at Fiat. The choice of Filosa could also be explained by the fact that one of the group's exposed nerves remains the 25% customs tariffs imposed by the Trump administration: 58% of the vehicles sold in the United States last year were assembled locally, while the remainder were imported almost exclusively from Mexico and Canada. Moody's also reported deteriorating profitability in North America. The negative industrial cash flow of EUR 6 billion in 2024 was a further warning sign.