Stellantis: Navigating Tariffs and Reviving Profitability Under New Leadership – A Compelling Buy

Stellantis, the global automotive giant, stands at a pivotal juncture. With Antonio Filosa's ascension to CEO and the company's struggle against U.S. tariffs and declining profits, the stakes have never been higher. Yet, beneath the surface of near-term challenges lies a strategic opportunity. Filosa's proven operational expertise in North America, coupled with Stellantis' undervalued stock and latent growth drivers, positions this automaker for a resurgence. Here's why investors should act now.

The Filosa Factor: A Proven Track Record in Turbulent Markets

Filosa's tenure as COO of North America since October 2023 has been marked by decisive action. His leadership of Jeep's global operations until 2025 and his role as Stellantis' Global Chief Quality Officer highlight his dual focus on execution and customer satisfaction. Key achievements include:
- Localization to Beat Tariffs: Filosa spearheaded the full U.S. assembly of the Jeep Grand Cherokee, avoiding the 25% tariff on European imports. This model now accounts for 30% of Jeep's U.S. sales, with March 2025 orders surging 150% month-over-month.
- Cost Discipline: A $3 billion restructuring plan in Europe has begun to reduce overcapacity, while his South American experience—where he slashed costs without sacrificing quality—provides a blueprint for broader operational efficiency.
- Dealer Relations Turnaround: Under Filosa, North American inventory has been slashed from 500,000 units in 2024 to 300,000 by early 2025, stabilizing supply chains and rebuilding trust with dealers strained by Tavares' austerity.

These moves signal Filosa's ability to navigate complex trade policies and operationalize growth—a critical skill as Stellantis faces $2.5 billion in annual tariff costs.

The Tariff Tempest: Challenges and Hidden Strengths

Stellantis' Q1 2025 results reveal both vulnerability and resilience. Net revenue dropped 14% to €35.8 billion, driven by a 9% decline in shipments and the 25% U.S. tariff on European imports. However, the data also hints at recovery:
- Market Share Gains: EU30 market share rose to 17.3%, fueled by launches like the Citroën C3 Aircross.
- EV Momentum: Electrified vehicle sales in the U.S. jumped 150% month-over-month in March, with the Jeep Grand Cherokee 4xe leading the charge.
- Global Diversification: South America's market share hit 23.8%, and the Middle East/Africa regions proved resilient despite import bans.

The key here is perspective: Stellantis' core brands—Jeep, Ram, and Chrysler—retain structural demand. The challenge is executing Filosa's localization and cost-cutting strategies to protect margins.

Valuation: A Stock Undervalued by Panic, Not Fundamentals

Stellantis' stock (STLA) has plummeted 55% over the past year, with a 27% drop in . Yet its valuation metrics scream opportunity:
- P/E Ratio of 5.0x: Far below the automotive sector average of 21.9x.
- Dividend Yield of 7.13%: Among the highest in the industry, rewarding shareholders even as the company restructures.
- Technical Support: The stock is near a critical $10.50 support zone, with traders citing harmonic levels suggesting a potential 40% rebound.

Analysts project a 60% upside to a $21 price target, assuming Filosa delivers on his 2025 margin goals. Even a conservative 11% annual earnings growth—below peers—could unlock outsized returns as the P/E expands toward industry averages.

Why Act Now? The Catalysts Are Clear

1. CEO Transition Finalized: Filosa's June 2025 appointment ends leadership uncertainty, enabling long-term planning.
2. Tariff Mitigation Progress: U.S. localization of the Ram 1500 and Jeep Wagoneer EV will reduce tariff exposure by 2026.
3. Electrification Surge: Stellantis' STLA AutoDrive autonomous tech and $17 billion EV investment plan aim to rival Tesla and BYD by 2026.

Risks, but Not Dealbreakers

• Tariff Volatility: The U.S. may extend or expand levies, but Filosa's localization strategy mitigates this.
• Margin Pressures: A 75% EBIT decline to €9.3 billion is projected for 2025, but cost cuts and volume recovery could stabilize this by 2026.

Conclusion: A Turnaround in the Making

Stellantis is undervalued, underappreciated, and under new leadership with a proven playbook for turning challenges into opportunities. Filosa's focus on localization, quality, and dealer relations aligns with the path to margin recovery. With a stock trading at historic lows and a dividend yield that rewards patience, this is a rare buy signal in a volatile sector. The time to act is now—before the market catches up.