Stellantis: Hidden Value in a Turnaround Tale

The automotive industry's challenges—shifting consumer preferences, supply chain volatility, and rising competition—are hitting Stellantis harder than most. Yet amid its Q2 sales decline of 10%, the European-American giant is quietly building a foundation for recovery through its Jeep and Ram brands, strategic leadership shifts, and a bold return to V-8 engines. For investors willing to look past near-term pain, the question is whether these moves mask undervalued opportunities.

The Jeep-Ram Engine of Growth

While Stellantis' overall U.S. sales dropped in Q2, its two most iconic brands are defying the slump. Jeep's Q2 sales rose 1% year-over-year, driven by its electrified and off-road models. The Wrangler, now a cultural icon, saw a 23% sales surge, while the Wrangler 4xe (its plug-in hybrid variant) hit its best April sales since 2021. The Grand Cherokee, a top-selling PHEV, added 5% in retail sales, and the mid-size Cherokee—set for a 2025 redesign—hints at further upside. Combined, Jeep's Q2 sales grew 6% from Q1, a sign of momentum.

Ram's performance is even stronger. Its Q2 sales jumped 5% year-over-year, with the Ram 1500 leading a 17% gain. The ProMaster van, a workhorse in urban logistics, rose 20%, while its HEMI V-8 engine revival—a move once unthinkable in an era of electrification—generated over 10,000 orders in its first 24 hours. This strategic pivot to high-margin, combustion-based performance models is a masterstroke. In a market where Chinese automakers are encroaching on electric vehicles (EVs), Stellantis is betting on its legacy brands' emotional appeal and segment dominance.

Leadership Reorganization: A Gamble on Agility

Antonio Filosa's June appointment as CEO marks a critical inflection point. Replacing the abrupt departure of former CEO Carlos Tavares, Filosa has restructured Stellantis to decentralize decision-making, giving regional heads like Jean-Philippe Imparato (Europe) and Emanuele Cappellano (South America) more autonomy. This shift aims to counter slow execution and bureaucratic bloat inherited from its Fiat Chrysler-PSA merger.

Key appointments signal priorities:
- Sébastien Jacquet, a China-savvy executive, now oversees Quality and EV platforms, addressing past reliability issues.
- Ned Curic, leading Product Development & Technology, merges software and hardware teams to accelerate EVs.
- Scott Thiele, the new Supply Chain chief, faces the urgent task of stabilizing logistics amid tariff pressures.

The market, however, has been skeptical. Shares fell 1.3% on Filosa's announcement, reflecting concerns over Q1's 14% revenue drop to €35.8 billion. Yet the restructuring could pay dividends. Regional autonomy may better align brands like Jeep and Ram with local demand, while tech integration could position Stellantis to compete in the EV race without abandoning its combustion strengths.

Navigating Tariffs and the V-8 Comeback

Stellantis' struggles are partly self-inflicted. U.S.-China trade tensions have disrupted supply chains, and the company admits tariff-related “uncertainties” have dented fleet sales. However, its Q2 retail order volumes rose 82% year-over-year, suggesting underlying demand is robust. The V-8 revival—once a relic in an EV-obsessed world—is a shrewd response to this tension. By catering to enthusiasts who still crave internal combustion, Ram and Jeep are tapping into a segment that Chinese automakers, focused on affordability, have yet to conquer.

Valuation: A Bottom in Sight?

At current prices, Stellantis trades at just 5.2x forward EV/EBITDA—a discount to peers like Ford (8.1x) and Toyota (7.9x). While its debt load ($34 billion) is daunting, its cash flow (€8.4 billion in H1 2024) and PHEV dominance (three models in the top five U.S. PHEV sales) offer buffers. The Cherokee launch and Ram's V-8 expansion could catalyze a rebound in H2 2025, while Filosa's cost-cutting and regional focus may stabilize margins.

The Investment Thesis

The risks are clear: execution delays, tariff escalation, and EV competition. Yet for patient investors, Stellantis offers a compelling asymmetry. Its brands hold enduring loyalty, its product pipeline is firing on key segments, and its leadership overhaul aims to fix structural flaws. The shares could rebound sharply if Q3 delivers on retail order strength and Cherokee demand.

Investment recommendation: Consider a cautious overweight position with a 12–18 month horizon, targeting entry at sub-$10 levels (as of June 2025). Monitor closely for signs of stabilization in U.S. sales and positive updates on the Cherokee's pre-orders.

In the automotive sector's relentless evolution, Stellantis is proving that even giants can pivot—if they bet on their crown jewels. The V-8's roar and the Cherokee's debut may just be the start.