Stellantis Extends Mirafiori Plant Stoppage: What's Behind the Decision?

As the automotive industry grapples with supply chain disruptions and weak demand, Stellantis, the world's fourth-largest automaker, has announced an extended stoppage at its iconic Mirafiori plant in Turin, Italy. The plant, which produces the electric Fiat 500 and two Maserati models, will remain idle until January 20, 2025, according to a union representative. But what lies behind this decision, and how will it impact Stellantis' production and sales targets?

Supply chain disruptions and weak demand are the primary factors driving the extended halt at the Mirafiori plant. The plant had already resumed operations on November 1, following a two-month pause due to weak demand. However, ongoing supply chain issues have forced Stellantis to extend the stoppage, impacting its European EV strategy and Maserati production.



The extended halt at the Mirafiori plant will significantly impact Stellantis' production and sales targets for the Fiat 500e and Maserati models. With the plant closed from Dec. 2, 2024, to Jan. 20, 2025, Stellantis will lose approximately 28 production days, equivalent to around 14% of the fourth quarter's working days. This halt will delay the production of the Fiat 500e and Maserati models, potentially leading to supply shortages and increased demand for these vehicles post-holiday season. Moreover, the stoppage may exacerbate Stellantis' ongoing supply chain issues, further disrupting its production schedule and timeline for new models.

The financial implications of this halt are significant. With 97% of production destined for Europe, weak demand and competition from China impact sales. The halt, from Dec. 2 to Jan. 5, follows a prior closure from Dec. 18 to Jan. 5. This adds to the previous suspension from Oct. 11 to Nov. 1, totaling a 3-month production loss. Assuming an average monthly revenue of €100 million for the Fiat 500e and €50 million for Maserati models, the halt could result in a €350 million revenue loss. Given Stellantis' 2024 revenue of €144 billion, this represents a 0.24% impact. However, the halt's effect on profit projections is more substantial, considering the high fixed costs and low variable costs in the automotive industry. Assuming a 10% profit margin, the halt could lead to a €35 million profit loss, or a 0.02% impact on Stellantis' 2024 profit projection of €175 billion.

In conclusion, the extended halt at Stellantis' Mirafiori plant is a result of supply chain disruptions and weak demand, with significant financial implications for the company's production and sales targets. As Stellantis navigates these challenges, investors and stakeholders alike will be watching closely to see how the automaker responds to these headwinds.

Disclaimer: Action AlertsPLUS, managed by the article's co-writer, holds no positions in any mentioned securities.