Stellantis NYSE: STLA reported improved second-quarter 2026 financial results, citing higher shipments, stronger production efficiency and cost reductions, while reaffirming its full-year outlook and expectation for positive industrial free cash flow in 2027.
Net revenues rose 13% year over year to €43.5 billion as consolidated shipments increased 10% to 1.6 million units. Adjusted operating income, or AOI, reached €773 million, up €560 million from the prior-year quarter, while the AOI margin improved 120 basis points to 1.8%.
Industrial free cash flow was positive €1 billion in the quarter, improving by €1 billion from a year earlier. Chief Financial Officer João Laranjo said the improvement reflected higher AOI, favorable seasonal working-capital dynamics tied to higher second-quarter volume and a lower run rate of capital expenditures and research-and-development spending.
Production, Quality and Cost Actions
Chief Executive Officer Antonio Filosa said the company’s operational efforts improved manufacturing efficiency by 870 basis points in North America and 170 basis points in Europe from a year earlier. Three-month-in-service quality improved 38% in North America and 24% in Europe, he said.
Industrial costs improved by more than €1.9 billion year over year. Laranjo attributed the change to manufacturing efficiencies, purchasing savings, lower regulatory expenses in North America and the absence of prior-year European recall-campaign warranty costs. These gains more than offset raw-material and tariff headwinds, according to the company.
The company’s Value Creation Program, or VCP, is intended to generate €6 billion in annual run-rate cost reductions by 2028. Filosa said Stellantis expects to have implemented 40% of identified initiatives by the end of 2026, supporting an expected €2.4 billion of AOI benefits in 2027, plus partial benefits from initiatives implemented during that year.
In response to analyst questions, management said material-cost savings and quality improvements are expected to be the largest contributors to margin improvement in North America. Filosa described VCP initiatives spanning direct materials, plant transformation costs, logistics and distribution, including supplier-routing optimization, higher utilization of logistics assets and warehouse consolidation.
Regional Results and Product Activity
North America posted AOI of €284 million and an AOI margin of 1.6%, representing a €724 million year-over-year improvement. Shipments increased 38%, aided by new-product launches and production built ahead of planned summer shutdowns. North American sales rose 6% year over year, marking a fourth consecutive quarter of gains, while regional market share increased 40 basis points, including a 50-basis-point increase in the U.S.
Ram sales rose 12%, Chrysler sales increased 54% following the launch of the new Pacifica, and Jeep Grand Wagoneer sales also advanced. Filosa said the Ram 1500 benefited from demand following the return of the HEMI V8 engine. The company is now shipping the Ram 1500 TRX SRT, and said the Ram Rumble Bee is scheduled to arrive later in the year.
Stellantis said U.S. dealer inventory reached 390,000 units in June, up about 70,000 units from January. Filosa said approximately 65,000 of that increase was associated with new products and preparations for summer plant shutdowns. The company expects inventory to decline to around 365,000 units by the end of July and said that level could support planned sales growth and upcoming launches.
In Europe, AOI was negative €94 million, though it improved €265 million from a year earlier. The region continued to face pricing pressure, which partially offset improved manufacturing and purchasing costs. Stellantis brand sales in Europe increased 3%, while sales including Leapmotor rose 7%. Battery-electric vehicle sales grew 20%, or 61% including Leapmotor.
Laranjo said Leapmotor vehicles are profitable but carry lower margins than Stellantis’ European average because of their powertrain mix, creating a negative mix effect. Still, the company expects an expanding product lineup to increase Leapmotor’s contribution over time. Leapmotor’s European sales increased sixfold year over year in the quarter, according to Filosa.
South America generated AOI of €402 million, with Stellantis maintaining more than 26% market share in both Brazil and Argentina. Middle East and Africa delivered AOI of €329 million despite an 8% decline in industry volumes, while Asia Pacific AOI rose 35% to €27 million.
Second-Half Outlook
Management said second-half performance is expected to be weighted toward the fourth quarter. The third quarter is expected to face pressure from summer shutdowns and continued raw-material inflation, while the fourth quarter should benefit from higher volume and a stronger ramp of VCP initiatives.
The company expects second-half headwinds of roughly €1 billion from raw materials and the non-repeat of an IEEPA tariff refund recognized in the first quarter. It expects lower volumes in the second half as inventory is reduced, but sees positive mix from lower rental-channel sales and new-product launches. Management also said pricing should be constructive in North America and stable elsewhere.
Stellantis now expects net tariff expenses of €1 billion to €1.2 billion in 2026, modestly better than the €1.3 billion previously communicated. It maintained its expectation that capital expenditures and R&D spending will equal 6.5% to 7% of net revenues for the year, with spending increasing in the second half.
Filosa said high-volume North American products currently in development are expected to reach the market beginning at the end of 2027 and into 2028. He added that the company plans to move Jeep Cherokee production to Belvidere, though he did not provide a production start date.
About Stellantis (NYSE:STLA)
Stellantis N.V. is a global automotive manufacturer formed through the merger of Fiat Chrysler Automobiles (FCA) and Groupe PSA, a transaction completed in January 2021. The company designs, manufactures and sells a broad portfolio of passenger cars, light commercial vehicles and related powertrains under a large number of well-known brands, including (but not limited to) Abarth, Alfa Romeo, Chrysler, Citroën, Dodge, Fiat, Jeep, Maserati, Opel, Peugeot, Ram and Vauxhall. Stellantis also provides parts, accessories, service operations and branded aftersales support through legacy networks such as Mopar and regional dealer ecosystems.
In addition to vehicle manufacturing, Stellantis operates mobility- and software-related businesses and financial services.
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