Stellantis, the parent company of Jeep and Dodge, experiences a decline in profit as the Detroit Three strike takes its toll.

• Stellantis' adjusted operating income margin in North America decreased by 100 basis points annually to 15.4%, according to the auto giant, which attributed the decline to production interruptions and expenses associated with new labor contracts.
• Despite the six weeks of industrial action, the auto giant reported strong earnings across all of 2023.

The Detroit Three automakers' six-week strikes in the second half of 2023 resulted in a 10% year-on-year decline in profit for the global auto giant in its North American profit center.

The adjusted operating income for the July-to-December period in 2023 was 10.2 billion euros ($10.96 billion), which is lower than the 11.3 billion euros recorded in the same period in 2022.

Despite the market's expectations, AOI's earnings proved more resilient to industrial action and exceeded the forecast of 9.54 billion euros by analysts polled by Reuters.

In Europe, Stellantis' shares are provisionally closed around 5.7% higher. On the New York Stock Exchange, shares closed Thursday at $25.99, up 6.6%, but below the new 52-week high of $26.10 achieved earlier in the day.

The AOI margin of the group in North America decreased by 100 basis points annually to 15.4%, according to Stellantis' earnings report. The company attributed this decline to production disruptions and expenses associated with new labor agreements.

In late October, Stellantis announced that labor strikes by the United Auto Workers union, which lasted six weeks from Sept. 15 and affected both and , resulted in a loss of $3.2 billion in revenue for the company through October.

The company, which owns brands such as Jeep, Dodge, Fiat, Chrysler, and Peugeot, reached an agreement with the UAW in late October to invest $18.9 billion in the U.S. by 2028. The deal, which includes at least 25% wage increases and the reopening of an idled plant in Illinois, was ratified by Stellantis workers stateside on November 17.

Stellantis CEO Carlos Tavares admitted on Thursday that the company's U.S. operations were not performing well in 2023, aside from the UAW strike.

Despite being the only major automaker to report a decline in U.S. sales last year, Stellantis' market share dropped below 10%. Additionally, including Kia, Stellantis was outsold for the first time ever.

Tavares stated to the media on Thursday that he is quite confident that 2024 will be better than 2023. He added that the company is providing North American executives with more flexibility in terms of marketing and incentives to boost sales. However, he noted that they would need to reassess the situation after one year to determine if their strategies were successful.

Record 2023 results

While the company's revenue decreased by 2.8% to 91.2 billion euros, its second-half industrial free cash flow dropped by 24% to 4.2 billion euros compared to the same period last year.

Although the auto giant experienced a six-week industrial action hit, it reported strong earnings for 2023, marking its third consecutive year of record results since its formation through a merger of Fiat Chrysler and PSA Groupe in January 2021.

The company's net revenue for 2023 was 189.5 billion euros, a 6% increase from the previous year, and consolidated shipment volume also rose by 7%. Adjusted operating income for the same year was up 1% to 24.3 billion euros, while industrial free cash flow increased by 19% to 12.9 billion euros.

On Thursday, the world's third-largest automaker by revenue announced a 16% increase in dividend per common share to 1.55 euros and a 2024 share buyback program of 3 billion euros.

Tavares expressed gratitude to Stellantis' teams for their exceptional performance and significant contributions to the company's growth, despite facing challenging circumstances.

Our industry leadership is solidified by today's record financial results, and we will remain strong as we face the challenges of 2024.

Stellantis aims to achieve a minimum commitment of double-digit adjusted operating income (AOI) margin and positive industrial free cash flow in 2024, despite macroeconomic uncertainties.

‘I agree with Elon’

Although demand for all-electric vehicles has been slower than anticipated in many regions, a significant portion of the company's plans for this year revolves around EVs. In the U.S., there has been increasing concern about EVs, prompting several automakers to adjust their plans and cut spending on these products.

Tavares stated that the company is still dedicated to its previously declared plans of investing at least 30 billion euros in EVs and related technologies by 2025.

The company is attempting to make affordable models in Europe, as stated by him, is the key to growing EV demand.

Tavares stated that the automaker intends to introduce 18 new electric vehicles in 2024, with eight of them being launched in the U.S.

Chinese automakers are gaining an edge in the European market for affordable EVs, with the European Union accusing them of undercutting local prices by around 20%.

Tavares concurred with CEO Elon Musk's statement from last month that Chinese automakers will dominate the global market without trade restrictions.

Tavares concurred with Elon's viewpoint, stating that it is crucial to strive for superior products for consumers, surpassing the Chinese competition.