On the heels of Ford profiting from running it’s prices up y/y, Strabismus checks in.
Stellantis hits record profits but warns on economic clouds
Net profit at Stellantis, the Jeep and Peugeot owner, rose by a third to €8bn, driven by record North American margins of 18 per cent. Revenues climbed 17 per cent to €88bn despite falling vehicle sales.
Parts shortages, particularly for semiconductor chips, have driven prices higher across the industry and allowed carmakers to focus on producing their most profitable models, as well as the electric vehicles needed to hit emissions targets.
Every region in the company’s portfolio recorded profit margins of at least 10 per cent, with even Latin America enjoying a 14 per cent figure despite a fall in sales. Car shipments in Europe fell 300,000 to 1.3mn, hitting revenues in the region, but profits rose to €3.2bn.
Meanwhile, Strabismus unit Jeep bails out of China, largest car market in the world. Management blames “government interference”. The fact is that, since Marchionne’s death, Jeep sales in China have fallen by 90%. My take is management is trying to get the same margins on Jeep in China that they do in the US, but the Chinese are insufficiently indoctrinated in the “Jeep thing” to pay up that much. So, in analytic driven MBA fashion, they abandon the largest market in the world, because they can’t get the exorbitant GP they want.
Jeep Pulls Out of China Over Government Meddling in Business
“We have been seeing over the last few years more and more political interference in the world of business in China,” Tavares said. “We don’t want to be a victim of cross-sanctions as has been the case for other companies in other regions of the world recently.”
“We have two big competitors, Volkswagen and GM, who are very present in China,” Tavares added. “I wouldn’t want to be in their place.”
Tavares acknowledged that the Jeep joint venture was racking up losses but said the company’s reasons for leaving run deeper. He said the decision was rooted in “broken trust” with its local partner, as well as the Chinese Communist Party and its economic policies supporting domestic auto companies.
What a pantload. They failed in China because the Chinese would not let themselves be gouged on Jeeps, like USians do. They will probably bail on India next, for the same reason. Indian market SUV road tests consistently say the Jeep Compass, which is built in India, is a nice car, but the price is exorbitant.
The MBA mantra “we’ll shrink this company to the point where only the few who will pay the price we want will be enough to keep us rolling in loot”