Stellantis’ Extended Reduced Hours Scheme in Italy and Its Implications for Global Auto Manufacturing Resilience

Stellantis’ recent extension of a reduced hours scheme at its Termoli plant in southern Italy—impacting over 1,800 workers by cutting their hours by up to 80% for 12 months—has become a focal point for assessing operational resilience in the global automotive sector. This move, effective September 1, 2025, replaces a smaller furlough scheme and reflects a broader struggle to adapt to weak European market demand, U.S. trade tariffs, and delayed product transitions [1]. The Termoli plant, a key producer of petrol engines for Jeep Compass models and other Stellantis vehicles, now faces an uncertain future as the company delays hybrid transmission production and pauses a battery factory project [2].

The decision underscores the fragility of traditional automotive supply chains in the face of geopolitical and economic volatility. U.S. tariffs on Termoli-produced engines, imposed under former President Donald Trump’s administration, have reduced export volumes and forced Stellantis to recalibrate its production strategy [3]. Meanwhile, the plant’s role in Stellantis’ electrification roadmap remains unclear, with dual-clutch transmission production delayed until 2026 and the Automotive Cells Company (ACC) battery hub project paused in 2024 [4]. These uncertainties highlight the challenges automakers face in balancing legacy operations with the transition to electrification.

The Termoli case is emblematic of a larger industry trend: the need for strategic flexibility in an era of rapid technological and regulatory shifts. Unlike Stellantis, General Motors (GM) has demonstrated stronger resilience, maintaining a 17.3% U.S. market share in H1 2025 and leveraging its EV strategy to offset tariff-related costs [5]. GM’s balance sheet, bolstered by $22.3 billion in cash and a renewed focus on EVs and autonomous driving, contrasts sharply with Stellantis’ struggles, which include a 13% revenue decline and €3.3 billion in pre-tax charges for platform impairments [6]. Investors are increasingly favoring automakers with diversified revenue streams and agile production models, as evidenced by GM’s Zacks Rank of “Strong Buy” versus Stellantis’ “Strong Sell” [7].

Stellantis’ energy transition efforts, however, offer a glimmer of hope. The Madrid plant’s collaboration with GreenYellow—a 4.6 MWp solar installation, 57% energy savings via heat pump electrification, and a 25 MWh battery storage system—demonstrates the company’s commitment to decarbonization [8]. These initiatives align with its “Dare Forward 2030” plan, which aims for carbon neutrality by 2038 and a 100% EV shift in Europe by 2030 [9]. Yet, the Madrid project’s success in reducing CO₂ emissions by 2,149 tons annually [10] must be scaled globally to offset the risks posed by its current operational challenges.

For investors, the Termoli furlough and Stellantis’ broader struggles raise critical questions about the long-term viability of legacy automakers in a market increasingly dominated by EV-first competitors. While Stellantis’ leadership under Antonio Filosa has emphasized cost-cutting and localized production, the company’s reliance on gasoline engines and delayed electrification timelines create a stark contrast with industry leaders like Toyota and Honda, which have maintained strong supplier relationships and profitability [11]. The automotive sector’s shift toward localized supply chains and modular production systems—exemplified by GM’s nearshoring strategies—further underscores the need for Stellantis to accelerate its transformation [12].

In conclusion, Stellantis’ extended reduced hours scheme in Italy is not merely a regional labor adjustment but a microcosm of the global auto industry’s struggle to reconcile legacy operations with the demands of electrification and geopolitical uncertainty. While the company’s energy transition projects and strategic pivots offer potential, its current financial and operational headwinds suggest a high-risk profile for investors. The path forward will require not only technological innovation but also a reimagining of industrial resilience in an era where adaptability is the new benchmark for success.

Source:
[1] Stellantis extends furlough scheme at Italian plant on weak demand, tariffs [https://www.reuters.com/business/world-at-work/stellantis-extends-furlough-scheme-italian-plant-weak-demand-tariffs-2025-08-25/]
[2] Stellantis Extends Furlough Plan at Italian Plant [https://moparinsiders.com/stellantis-extends-furlough-plan-at-italian-plant-as-demand-slumps/]
[3] Stellantis Adjusts Termoli Plant Operations Amid Market Challenges [https://www.devdiscourse.com/article/technology/3602728-stellantis-adjusts-termoli-plant-operations-amid-market-challenges]
[4] Stellantis’ 2025 First-Half Struggles and Strategic Turnaround [https://www.ainvest.com/news/stellantis-2025-struggles-strategic-turnaround-assessing-resilience-investor-outlook-2507/]
[5] Auto Giants Face-Off: GM vs. STLA - Which Stock Wins Out? [https://www.theglobeandmail.com/investing/markets/stocks/GM/pressreleases/34426693/auto-giants-face-off-gm-vs-stla-which-stock-wins-out/]
[6] Stellantis Reports First Half 2025 Results Reflecting External Headwinds and Ongoing Recovery Actions [https://www.media.stellantis.com/uk-en/corporate-communications/press/stellantis-reports-first-half-2025-results-reflecting-external-headwinds-and-ongoing-recovery-actions-financial-guidance-re-established]
[7] Franchise Performance Insights: Key Trends Shaping Auto Retail in 2025 [https://haigpartners.com/resources/franchise-performance-insights-key-trends-shaping-auto-retail-in-2025/]
[8] GreenYellow supports Stellantis’ decarbonization with an innovative comprehensive energy transition project [https://www.greenyellow.com/en/a-la-une/greenyellow-supports-stellantis-decarbonization-with-an-innovative-comprehensive-energy-transition-project/]
[9] How Stellantis is Gearing up for a Green Future [https://evmagazine.com/sustainability/stellantis-gearing-up-for-green-future]
[10] GreenYellow supports Stellantis’ decarbonization with an innovative comprehensive energy transition project [https://www.greenyellow.com/en/a-la-une/greenyellow-supports-stellantis-decarbonization-with-an-innovative-comprehensive-energy-transition-project/]
[11] Franchise Performance Insights: Key Trends Shaping Auto Retail in 2025 [https://haigpartners.com/resources/franchise-performance-insights-key-trends-shaping-auto-retail-in-2025/]
[12] Automotive supply chains in flux: 2025 outlook and trends [https://www.automotivelogistics.media/nearshoring/forecasts-for-2025-shows-resilience-is-tested-by-trade-volatility-ev-transitions-and-digital-fragmentation/337990]