Stellantis NV floated the possibility of shedding one or more of the auto giant’s 14 brands should they fail to remain profitable, as pressure rises on chief executive officer Carlos Tavares after a slump in first-half earnings.

While all of the group’s brands are important assets and profitable, “there’s absolutely no taboo” if their performance were to deteriorate, Tavares said on Thursday.

The brands “are here to be leveraged,” the CEO said in an interview with Bloomberg Television. “If they are not able to monetize the value that they represent, then decisions will come.”

The maker of Jeeps, Fiats and Peugeots earlier Thursday reported net income that almost halved in the six months through June after a massive sales drop in the US and Europe.

The results, which sent the stock down as much as 13%, follow disappointing reports this week from Ford Motor Co and Tesla Inc that also sent their shares tumbling. Even Renault SA, which reported its highest-ever profitability on Wednesday, saw its shares drop 10% as broader investor sentiment soured.

Carmakers are contending with weakening demand, especially for electric cars, and facing intensifying competition in Asia and Europe from Chinese manufacturers. For Stellantis, the problems were most acute in the US, where the company has seen high inventory levels, a string of executive departures and quality issues weigh on profit.

To counter the slump, the manufacturer is already moving to shed assets. Separately on Thursday, it announced the sale of a majority stake in robotic unit Comau, unleashing a new round of criticism among unions in Italy, and said it will conduct a strategic review of its UK operations.

With shipments in North America falling 18%, Stellantis has decided to revive some models it had pulled from the US market, including the Dodge Charger, to win some clients back, chief financial officer Natalie Knight said on a call with reporters.

The carmaker is also likely to cut prices, especially as they introduce new products, Knight added. North America, where Stellantis is trimming production in the third quarter, “is the market that needs the most work and where we are most concentrated”.

“The Stellantis problems continue,” Citi analyst Harald Hendrikse wrote in a note. “We see no real improvement until and unless Stellantis removes the overhang from inventories - which itself would put pressure” on margins.

Among the other problems is Stellantis’ Maserati brand, with shipments dropping by more than half to 6,500 units in the first six months of the year. Echoing comments made in the interview by Tavares, Knight suggested the company may reconsider what would be “the best home” for the brand, even though for now the group remains focused on driving improvements there.

The results add pressure on Tavares, the highest paid CEO among traditional carmakers, to reverse a decline in market share in several countries. He has already extensively cut costs, with €500 million more in savings slated for the second half of the year. Some analysts have started flagging the limits of his strategy.

Overall, Stellantis’ net income fell 48% to €5.6 billion (US$6.1 billion or RM28.35 billion) in the first half, missing the €7 billion average estimate in a Bloomberg survey of analysts.

The results could revive criticism from shareholders and advisory groups that opposed Tavares’ US$40 million pay package for last year, a 60% increase from 2022 levels that lifted his compensation above his mass-market industry peers.

Margins declined most significantly in North America, Stellantis’ key region for profits, amid an unfavourable model lineup and pressure on prices, the company said. The company had warned about shrinking profitability in April.

The carmaker is taking “corrective actions” to address the problems, Tavares said. Stellantis reiterated it’s launching 20 new vehicles this year to help boost momentum. The company also plans to further lower labor costs and expects 25% reduction in logistics expenses in the second part of the year.

  - Bloomberg