Stellantis outlook revised to negative by S&P on profitability concerns

Investing.com -- S&P Global Ratings revised its outlook on Stellantis (NYSE:STLA) to negative from stable on Friday, while affirming its ’BBB/A-2’ ratings for the automaker.

The rating agency cited challenges in Stellantis’ efforts to restore profitability in North America, where the company reported an adjusted operating margin of minus 3.4% in the first half of 2025, following minus 6.8% in the second half of 2024.

S&P noted that Stellantis cut prices on selected U.S. models in the second half of 2024 and increased incentives, which were higher than market averages in June 2025. These measures helped correct excess inventory, bringing dealer inventory to about 68 days at the end of June 2025, up from 63 days at the end of December 2024, and significantly below the more than 90 days recorded in June 2024.

The automaker’s U.S. market share stood at approximately 7% in the second quarter of 2025, down from 8.2% in 2024 and 13.0% in 2019. In 2024, Stellantis lost its fifth-place position in the U.S. market to Honda (NYSE:HMC).

S&P indicated that Stellantis’ recovery in North America depends heavily on the success of upcoming model launches, including the Jeep Cherokee and Compass, as well as the combustion engine version of the Dodge Charger later this year.

In Europe, Stellantis faces similar challenges, with its adjusted operating margin falling to zero percent in the first half of 2025, compared to 1.2% in the second half of 2024 and 6.9% in the first half of 2024. S&P observed discounts exceeding 10% on many vehicles across Stellantis brands, reflecting intensified competition.

The rating agency also highlighted the impact of U.S. import tariffs, projecting a hit of about €1.5 billion to Stellantis’ EBITDA in 2025 and approximately €1.8 billion in 2026 after mitigating actions.

S&P could downgrade Stellantis in the next 12-18 months if the company fails to significantly improve its operating performance in 2026, with prospects of sustainably achieving an adjusted EBITDA margin above 8% and free operating cash flow to sales of about 3% in 2027.

The outlook could return to stable if successful model launches and improved management of pricing, inventory, and mix enable Stellantis to restore its financial metrics, supported by market shares above 7% in North America and above 15% in Europe.

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