Stellantis Plans an Epic 2025 Comeback. Is the Stock a Buy?

Stellantis (STLA), the multinational automaker parent company of beloved American auto brands Chrysler, Jeep, Dodge, and Ram Trucks, is heading into 2025 with a plan to stage a massive comeback after shedding roughly half its value since March 2024. With a rock-bottom price-to-earnings ratio, doom and gloom surrounding potential tariff impacts, and a rocky relationship to repair with its network of dealerships, Stellantis has a lot on its plate. Let's take a look at what the automaker has planned for 2025 and whether its stock is a buy.

Stellantis executives have promised incremental improvements, momentum, and sales gains in 2025. The company plans to explore powertrain opportunities, reenter segments that it had previously exited, put its product in a more competitive position, and focus on improving vehicle quality. Along with that will be an advertising push to drive consumer demand and make sure the company is driving message support at Tier 1 and Tier 2 to drive the message that they need.

Stellantis is also planning to invest more than $5 billion in the U.S. to strengthen its manufacturing footprint. This includes a $1.2 billion investment in its Belvidere, Illinois, assembly plant to build a new midsize pickup truck, as well as investments in its Detroit plant to make a new Dodge car and its Toledo site that produces Jeep trucks, among other investments. Additionally, Stellantis is planning to increase its advertising spend to drive consumer engagement and stimulate demand, including a high-profile Super Bowl commercial for Jeep and Ram.

However, investors must consider the uncertainty facing Stellantis. One of the biggest potential problems facing the global automaker is President Donald Trump's threat of additional tariffs on Canada and Mexico. More specifically, Trump has threatened to impose a 25% tariff on U.S. imports from the two countries, which is a huge deal considering about 40% of Stellantis' vehicles sold in the U.S. are manufactured in Canada and Mexico, per Moody's. In fact, according to S&P Global in a report, European and American automakers could stand to lose up to 17% of their combined annual core profits if the U.S. imposes tariffs on Europe, Mexico, and Canada, with Stellantis marked as one of the most exposed to tariff problems.

Despite the massive potential upside, this comeback will likely take longer than 2025 alone; it's a big turnaround process, and Stellantis has a lot of problems to fix and uncertainty to face in the near term. For investors, this is a stock to watch rather than a stock to buy now.

In conclusion, Stellantis has a lot on its plate for 2025, with plans to invest in U.S. manufacturing, improve its product offerings, and boost consumer demand through increased advertising. However, the uncertainty surrounding potential U.S. tariffs on Canada and Mexico poses a significant risk to the automaker's supply chain and production facilities in those countries. While the stock may be a buy for risk-accepting investors, it's important to monitor the situation closely and consider the potential impact of tariffs on Stellantis' operations and financial performance.