Stellantis Q3 Earnings Call Highlights

Key Points

• Third-quarter results improved year over year: Net revenue rose 1% to €37.6 billion, adjusted operating income increased 184% to €256 million, and the operating margin expanded to 0.7% despite a 1% shipment decline and negative €4 billion in industrial free cash flow.
• Cost-cutting efforts are gaining momentum: Industrial cost actions contributed €828 million, and Stellantis expects to exceed its €2.4 billion VCP savings milestone entering 2027, while warning that commodity and memory-chip inflation will offset some benefits.
• Regional performance was mixed: North America returned to profitability and South America remained strong, but Europe posted a €311 million operating loss due to pricing pressure and an unfavorable EV-heavy sales mix. Management reaffirmed its 2026 outlook and expects fourth-quarter working-capital improvements as inventory is reduced.

Stellantis NYSE: STLA reported third-quarter results that improved from a year earlier despite lower planned production volumes, raw-material inflation and continued pricing pressure in Europe, while reaffirming its 2026 outlook and its expectation to generate positive industrial free cash flow in 2027.

Chief Executive Officer Antonio Filosa said the company’s third-quarter performance reflected planned summer shutdowns, particularly in North America, as well as higher material costs. Still, he said the company improved across its primary financial measures as execution of its FaSTLAne 2030 strategy and Value Creation Program, or VCP, began contributing to results.

“The strategy is delivering,” Filosa said, noting that net revenues rose 1% despite a 1% decline in volume, adjusted operating income margin improved by 50 basis points, and industrial free cash flow improved by €300 million from the prior year.

Third-Quarter Financial Results

Chief Financial Officer João Laranjo said consolidated shipments totaled 1.3 million units, down 1% year-over-year. Net revenue rose 1% to €37.6 billion, supported by growth in financial services.

• Adjusted operating income was €256 million, improving €166 million, or 184%, from the prior-year quarter.
• Adjusted operating income margin was 0.7%, up 50 basis points year-over-year.
• Industrial free cash flow was negative €4 billion, an improvement of €300 million from a year earlier.
• Total inventory increased 14% year-over-year to 1.4 million units.

Laranjo said the negative quarterly free cash flow primarily reflected seasonal working-capital movements tied to lower production and shipping volumes relative to the second quarter. The company expects a substantial reversal in the fourth quarter as it reduces original-equipment-manufacturer inventory near year-end.

Capital expenditures declined €500 million year-over-year. Stellantis expects combined capital expenditures and research and development spending to represent about 6.5% of 2026 net revenue, in line with its FaSTLAne investment plan.

Cost Savings and VCP Ramp-Up

Industrial costs were the largest contributor to the year-over-year improvement, providing an €828 million benefit, according to Laranjo. He cited purchasing efficiencies, early VCP benefits, lower CO2 compliance costs and lower warranty costs, partly offset by commodity inflation.

Filosa said Stellantis expects to exceed its objective of implementing 40% of the initiatives supporting its €6 billion VCP target by the end of 2026. The program is expected to generate more than €2.4 billion in cost savings entering 2027, with a €6 billion annual run-rate target by 2028 and beyond.

The CEO described VCP as a broad effort addressing product, manufacturing and logistics costs. Examples include redesigning wiring harnesses, optimizing the use of precious materials in catalysts, deploying artificial-intelligence tools for preventive maintenance and logistics routing, and bringing some production processes in-house.

“We will exceed the €2.4 billion cost saving that we set as a milestone to start 2027,” Filosa said. He added that savings in the fourth quarter are expected to reach the mid-hundreds of millions of euros, including the carryover effect from initiatives implemented during the third quarter.

Management also cautioned that VCP represents gross savings and does not account for expected commodity and microchip cost pressures. Laranjo said commodity inflation was about 1% of revenue in the third quarter and is expected to remain at that level in the fourth quarter, while memory-chip pressures are increasing.

Regional Performance

North America generated adjusted operating income of €64 million and a 0.4% margin, improving €539 million from the year-earlier period. The improvement reflected industrial cost actions and favorable pricing, partially offset by lower volumes and higher R&D expenses.

Filosa said Ram was the region’s fastest-growing brand in the quarter and year-to-date. U.S. Ram 1500 light-duty pickup sales increased 73% year-over-year. The company said the initial allocation of its upcoming Ram Rebel Sport Truck sold out within 24 hours after orders opened.

Europe reported adjusted operating income of negative €311 million, a year-over-year deterioration of €468 million. Higher volumes and cost savings were outweighed by unfavorable sales mix from greater battery-electric vehicle penetration and continued pricing pressure.

Stellantis said EU30 passenger-car BEV sales increased 65% year-over-year, or 93% including Leapmotor. The company remains the light-commercial-vehicle market leader with nearly 27% market share. It also said Leapmotor volumes rose fourfold year-over-year, while production of the Leapmotor B10 began at Stellantis’ Zaragoza plant in Spain.

South America delivered adjusted operating income of €431 million, broadly in line with the prior year. Stellantis maintained nearly 19% regional market share, including Leapmotor, and retained more than 25% share in both Brazil and Argentina. In Brazil, sales rose 5% to more than 200,000 units, driven largely by Fiat and Ram pickups.

Middle East and Africa adjusted operating income declined €28 million to €244 million, primarily due to lower Turkish volume during the transition from the Fiat Egea to the upcoming Fiat Grizzly. Asia Pacific turned profitable, reporting adjusted operating income of €18 million, an improvement of €22 million.

Outlook and Inventory Plans

Stellantis reaffirmed its 2026 guidance. Its outlook includes approximately €1 billion in net tariff costs, modestly improved from its prior estimate of €1 billion to €1.2 billion. It also includes approximately €1.6 billion in payments related to charges recorded during the second half of 2025, of which €1.1 billion had been paid through September.

For the fourth quarter, the company expects higher overall volumes, led by Europe, broadly stable pricing, accelerated VCP savings and a positive working-capital contribution. It also expects additional costs related to memory chips and recalls.

In the U.S., dealer inventory stood at about 368,000 units at the end of September, up 23% from a year earlier but down 6% sequentially. Stellantis expects to end 2026 with U.S. dealer inventory between 320,000 and 350,000 units.

Filosa said the company will manage production in line with demand while prioritizing profitability and pricing discipline. He also pointed to forthcoming product launches, including the Jeep Recon BEV, Ram ProMaster City and Jeep Grand Wagoneer range-extended hybrid, as well as further Jeep, Ram, Dodge and Chrysler launches planned for 2027.

About Stellantis (NYSE:STLA)

Stellantis N.V. NYSE: STLA is a global automotive company formed in 2021 through the merger of Fiat Chrysler Automobiles and Groupe PSA. The company designs, engineers, manufactures and sells passenger cars, light commercial vehicles and mobility solutions across markets worldwide.

Stellantis operates a broad portfolio of automotive brands, including Abarth, Alfa Romeo, Chrysler, Citroën, Dodge, DS Automobiles, FIAT, Jeep, Lancia, Maserati, Opel, Peugeot, Ram and Vauxhall. Its products range from mass-market cars and sport utility vehicles to commercial vans, performance vehicles and luxury automobiles.

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