Summary of Conference Call Company and Industry - **Company**: Stellantis - **Industry**: Automotive Key Points and Arguments North American Market Performance - Stellantis has seen positive trends in the North American market, with market share increasing from 7% in the first half to approximately 8% in the third quarter, attributed to new product launches and strong market acceptance [1][2] - The return of the Ram Hemi V8 engine has been particularly successful, with 10,000 orders on the first day of announcement, growing to 50,000 orders within six weeks [2] - The Jeep Cherokee, a significant model in the midsize SUV segment, is being relaunched with improvements, including hybrid technology for better fuel economy [3][4] Product Launches and Strategy - Stellantis is focusing on a sequence of product launches, including the Jeep Cherokee and Dodge Charger, which are expected to drive volume growth sustainably [4][11] - The company is improving execution on product launches, with a commitment to timely releases [11] - A shift in strategy has been noted, particularly regarding battery electric vehicle (BEV) penetration expectations, which have been revised down from 50% to around 6-7% in the U.S. by 2030 [8][9] Regulatory Environment and Market Dynamics - The regulatory landscape in the U.S. and Europe is evolving, with Stellantis advocating for a balanced approach to CO2 emissions regulations that considers environmental protection, job preservation, and market affordability [12][13] - The company is preparing for upcoming EU regulations and is optimistic about the potential for a milder energy transition [16] Financial Outlook and Profitability - Stellantis is cautious about profitability expectations for the second half of the year, with a focus on closing the year before making definitive statements [5][7] - The company aims to improve cash generation and business KPIs gradually, acknowledging a negative cash flow of EUR 6.6 billion last year [28][29] Competitive Landscape and Future Plans - Stellantis recognizes the competitive threat from Chinese automakers, particularly in South America and the Middle East, and plans to leverage localization strategies to maintain its market position [50][52] - The company is optimistic about its product expansion in North America, particularly for the RAM brand, which is expected to introduce new models and capitalize on existing brand equity [23][44] Market Share Recovery in Europe - Stellantis has lost market share in Europe over the past five years and is implementing strategies to recover, including launching new models and leveraging partnerships like Leapmotor [37][40] - The company is focusing on segments where it has historical strength, such as the A and B segments, and is ramping up production of competitive models [38][41] Other Important Insights - The company is committed to improving its dealer inventory management and product launch rigor, which are critical for maintaining momentum [22] - Stellantis is exploring opportunities in hybrid technology, with a belief that hybrids will be a favored powertrain in the U.S. market [35] - The company is also assessing its brand portfolio and the potential need for streamlining based on each brand's unique strengths and market opportunities [43][44]

Financial Data and Key Metrics Changes - Consolidated shipments and net revenue both increased by 13% year-over-year, with consolidated shipments reaching 1.3 million units, an increase of 152,000 units [19][5] - Net revenues amounted to €37.2 billion, also reflecting a 13% increase compared to the third quarter of 2024 [19][20] - North America saw a 35% improvement in shipments, primarily due to normalized inventory dynamics following previous dealer inventory reductions [19][20] Business Line Data and Key Metrics Changes - North American sales rose by 6% year-over-year, driven by strong performances from Jeep products such as Wrangler, Gladiator, and Wagoneer [9][19] - In Europe, market share decreased by 70 basis points due to softer volumes in key markets, although new product launches are expected to improve performance [10][19] - The company launched two major products in the third quarter, with plans for additional launches in both North America and Europe [6][7] Market Data and Key Metrics Changes - The U.S. market share is showing signs of improvement, while Europe is facing challenges with declining volumes in the French and Italian markets [5][10] - South America experienced a 5% revenue decline, attributed to tough comparisons with the previous year [23] Company Strategy and Development Direction - The company announced a $13 billion investment in U.S. manufacturing, aimed at increasing production capacity by 50% and introducing five all-new vehicles [15][16] - The strategy focuses on correcting past product gaps and enhancing market competitiveness, particularly in the U.S. mid-size SUV segment [33][34] - The company is also engaging with European policymakers to advocate for necessary reforms in the automotive industry [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the return to top-line growth and confirmed guidance for continued sequential improvement in the second half of 2025 [24][27] - The management acknowledged challenges in Europe but emphasized ongoing efforts to regain market share and improve profitability [10][11] Other Important Information - The company is refining its warranty cost estimation methodology, which may lead to one-time charges but is not expected to materially impact future profitability [25][26] - The company is actively monitoring supply chain issues, particularly related to chip shortages, to mitigate potential disruptions [80] Q&A Session Summary Question: Can you discuss production capacity and pricing power improvements? - Management highlighted a return to top-line growth and favorable pricing dynamics, with a focus on correcting past strategic decisions to enhance product offerings [32][33] Question: What are the key levers for improving free cash generation? - The primary driver for free cash flow improvement is expected to be volume growth in North America [35] Question: Can you clarify free cash flow dynamics and expectations for 2026? - Management confirmed that the anticipated cash flow dynamics are correct, with North America being the main region for volume improvement [39] Question: What is the outlook for European margins? - Management confirmed intentions to improve margins in Europe through strategic product launches and market share recovery [71][74] Question: How will the $13 billion U.S. investment impact restructuring needs? - The investment is aimed at leveraging industrial capacity without planned shutdowns, focusing on growth in the U.S. market [77] Question: What are the implications of new U.S. regulations on the company? - Management welcomed the new regulations as opportunities for growth and emphasized a strategy focused on product diversity and customer choice [85]

Financial Data and Key Metrics Changes - In Q3 2025, Stellantis reported a 13% increase in consolidated shipments and net revenues compared to the prior year, with consolidated shipments reaching 1.3 million units, up 152,000 units [4][18] - Net revenues amounted to €37.2 billion, also reflecting a 13% year-over-year increase, driven by improvements in North America, Europe, and the Middle East and Africa [18][19] - The company confirmed its financial guidance for the second half of 2025, expecting continued sequential improvement [4][22] Business Line Data and Key Metrics Changes - North America saw a 35% improvement in shipments, primarily due to normalized inventory dynamics following previous dealer inventory reductions [18][19] - The Jeep brand experienced a sales growth of 11% in Q3, nearly double the U.S. market's growth of 6% [15] - In Europe, the company faced a 70 basis point decline in market share due to softer volumes in key markets, but plans to introduce new products to regain share [8][21] Market Data and Key Metrics Changes - U.S. sales rose 6% year-over-year, with strong performances from Jeep products like Wrangler and Gladiator [7][18] - The Middle East and Africa region reported a 21% increase in shipments year-to-date, driven by higher volumes in Algeria [21] - South America experienced a 5% decline in revenue, attributed to tough comparisons with the previous year [21] Company Strategy and Development Direction - Stellantis announced a $13 billion investment in U.S. manufacturing, aimed at increasing production capacity by 50% and introducing five all-new vehicles [3][13] - The company is focusing on correcting past strategic decisions by reintroducing key products and enhancing its product lineup to meet customer demand [40][57] - The strategy includes a strong emphasis on product launches, with plans for 10 major new products in 2025, including the Jeep Cherokee and Dodge Charger [5][6] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to top-line growth after seven quarters of declines, highlighting improved pricing power and competitive positioning [39][40] - The company is actively engaging with European policymakers to advocate for necessary reforms in the auto industry [9] - Management anticipates a stable pricing environment in the U.S. and is focused on achieving operational efficiencies to offset potential cost increases [77] Other Important Information - Stellantis is working on a strategic review that may lead to project cancellations and adjustments in product offerings, which could have limited cash impact in 2025 [96] - The company is monitoring the global chip supply situation closely, implementing daily management strategies to mitigate disruptions [90] Q&A Session Summary Question: Can you discuss the improvement of production capacity and pricing power? - Management highlighted a return to top-line growth and favorable pricing dynamics, correcting past strategic decisions to fill product gaps [39][40] Question: What are the key levers for improving free cash generation? - The primary driver for free cash flow improvement is expected to be volume growth in North America, with ongoing efforts to enhance savings and efficiencies [42] Question: Can you clarify the dynamics of free cash flow and working capital? - Management confirmed that the anticipated improvement in free cash flow is linked to volume growth, particularly in North America, and acknowledged the importance of managing working capital effectively [49][88] Question: What is the outlook for margins in Europe? - The company aims to improve margins in Europe through strategic product actions and regulatory engagement, despite facing challenges in the market [84][87] Question: How will the $13 billion investment impact cost structure and competitiveness? - The investment is expected to enhance production capacity and efficiency, with management confident in maintaining a stable pricing scenario [77][87]

Core Insights - Stellantis reported a 13% year-over-year increase in net revenues for Q3 2025, reaching €37.2 billion, driven by growth in North America, Enlarged Europe, and Middle East & Africa, while South America experienced a moderate decline [4][9] - Consolidated shipments totaled 1.3 million units, reflecting a 13% increase, with North America showing a significant 35% improvement due to normalized inventory dynamics [4][9] - The company announced a strategic investment of $13 billion in the U.S. over the next four years to enhance growth and manufacturing capabilities, marking the largest investment in its 100-year history in the U.S. [11][12] Financial Performance - Q3 2025 net revenues increased by €4.2 billion compared to Q3 2024, primarily due to higher sales volumes in key markets [4][9] - Year-to-date (YTD) combined shipments decreased by 2% to 4.024 million units, while consolidated shipments fell by 1% to 3.964 million units [3][4] - The company anticipates improved net revenues and industrial free cash flows in H2 2025 compared to H1 2025 [13] Regional Performance - North America saw a 29% increase in net revenues, driven by higher volumes in Jeep® Wrangler and Ram light-duty trucks, with shipments up 35% [17] - Enlarged Europe experienced an 8% increase in shipments, supported by new model introductions, while net revenues rose by 4% [18] - Middle East & Africa reported a 21% increase in consolidated shipments, with net revenues up 9% due to higher volumes in Algeria, Türkiye, and Egypt [19] Product Launches and Market Trends - By the end of Q3 2025, six out of ten planned new vehicle launches for 2025 were completed, with additional launches expected in Q4 [5] - Sales momentum in the U.S. improved with a 6% year-over-year increase in Q3 sales, achieving a market share of 8.7% in September, the highest in 15 months [6] - The company is focusing on reintroducing several volume nameplates and enhancing customer choice through strategic product changes [5][6] Strategic Initiatives - Stellantis is undertaking a review of its warranty estimation process, which may lead to changes in estimates and one-off charges in H2 2025 [14] - The leadership team has been strengthened with new appointments aimed at enhancing regional focus and driving long-term success [10]