By Jon Sindreu

Regardless of who next leads Stellantis, the owner of Jeep has a tough mission ahead: Justifying its own existence.

On Wednesday, Stellantis said fourth-quarter vehicle shipments fell 9% from a year earlier, capping a bad 2024. Troubles were worst in the key North American market, where it ran down bloated inventories, cut prices and delayed models such as the all-electric Ram pickup truck.

As a result, the adjusted operating margin came in at 5.5% for 2024, below Wall Street forecasts. The company also disappointed investors by saying this year's margin will likely remain in the "mid-single" digits.

Shares in the automaker, which also owns Chrysler, Fiat and Peugeot, fell roughly 4%.

To be fair, executives did say that numbers will be healthier in the second half. They also underscored that Stellantis is better placed to withstand potential U.S. tariffs than European and Japanese rivals-that is, unless levies are slapped on Mexico-because nearly all the cars it sells to the U.S. are made in North America.

What ultimately holds back Stellantis's stock, however, is a more existential question: What is it for? When it was created by merging Fiat Chrysler Automobiles and Groupe PSA in 2021, governments were pushing hard for electrification. Automakers were desperate to pool development resources and reduce complexity by making platforms that could accommodate multiple powertrains-be those electric, hybrid or gas.

The conglomerate successfully focused on generating efficiencies across its multiple brands, even if that meant losing market share in many geographies.

Four years later, the world has changed: Growth in sales of electric cars has slowed, officials are de-emphasizing green commitments, and Chinese vehicles are a much larger threat.

Meanwhile, Stellantis is searching for new leadership after the departure in December of Chief Executive Carlos Tavares. He was blamed for allowing the product lineup of brands such as Jeep to grow stale while overpricing the cars.

"2025 is a year where we need to get to our potential," Chairman John Elkann told analysts Wednesday "We are on the trajectory of making sure that we get back to growth."

Stellantis's bet on scale was good for cutting costs. What investors need to see is that it also serves to actually sell cars.

This analysis comes from the Journal's Heard on the Street team. Subscribe to their free daily afternoon newsletter here.

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(END) Dow Jones Newswires

February 26, 2025 10:57 ET (15:57 GMT)

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