Stellantis (STLA) expressed support for U.S. President Trump’s goal of increasing domestic car production, while thanking him for a one-month tariff exemption on vehicles imported from Canada and Mexico.
The company said “We share the President’s objective to build more American cars and create lasting American jobs. We look forward to working with him and his team.” Also, the company reaffirmed its commitment to create domestic jobs.
Tariff Delay Benefits Stellantis
The company, formed from the merger of Fiat Chrysler and Peugeot owner PSA in early 2021, operates plants in the U.S., Mexico, and Canada. The tariff exemption provides a reprieve for Stellantis, which imports about 40% of its US-sold vehicles from Mexico and Canada.
The tariff-delay benefits STLA as it postpones the immediate financial burden of a 25% tariff on imports from Mexico and Canada, helping Stellantis avoid higher production costs for now. Also, the extra time allows STLA to explore ways to align with U.S. trade policies, such as increasing domestic production, while maintaining its operations in Mexico and Canada.
It is worth highlighting that Stellantis has disclosed plans to invest in its U.S. operations at the start of Trump’s presidency in January, expressing its strong support for his agenda to boost the American auto sector.
STLA Facing a Difficult Time in the U.S.
The news comes at a time when Stellantis is facing several problems. Unsold inventories have become a major issue, with some models taking over a year to sell, leading to higher costs and lower profits. Also, delays in the launch of new models and a lack of smaller, more affordable vehicles have left Stellantis struggling to compete with rivals.
Adding to these troubles, the departure of CEO Carlos Tavares in December 2024 has created leadership instability. Stellantis, currently led by Chairman John Elkann, is in the process of searching for a new CEO.
These challenges have taken a toll on STLA’s financial performance, with a 56.2% year-over-year drop in adjusted profits for 2024. Vehicle shipments fell by 12%, and revenue declined by 21.2%, largely due to struggles in the North American market.
Is STLA a Good Stock to Buy?
Turning to Wall Street, STLA stock has a Moderate Buy consensus rating based on five Buys, eight Holds, and one Sell assigned in the last three months. At $14.19, the average Stellantis price target implies a 12.1% upside potential. The stock has declined 16.8% over the past six months.
