Stellantis’ Struggle: How Rising Prices Drove Away Customers
Elena Aragon’s recent car-buying experience highlights a significant issue plaguing Stellantis, the multinational automaker. The 24-year-old instructor opted for a Hyundai over Stellantis’ Fiat and Peugeot due to the latter’s unaffordable prices. This trend is not unique to Aragon; many customers are shying away from Stellantis’ mass-market brands due to rising prices.
A Problem of Profit Over People
Under CEO Carlos Tavares, Stellantis focused on efficiency and margin growth, leading to a significant increase in prices. This strategy may have impressed investors initially, but it ultimately drove away customers. Tavares’ abrupt resignation has brought attention to the company’s struggles in its core European market.
Lost Market Share
Stellantis has lost a third of its market share in Europe, with Fiat’s market penetration halving to 1.8% and Citroen’s shrinking to 2.2%. The company’s top investor, the Fiat-founding Agnelli family, is now facing the consequences of Tavares’ focus on profits over people.
The Disappearing Affordable Options
European car dealers point to the lack of affordable options in Stellantis’ range as a significant issue. The Lancia Ypsilon model, once priced at 17,000 euros, now costs at least 25,000 euros. This trend is evident across Stellantis’ brands, with the average retail price of a passenger car in the eurozone’s 14 largest countries standing at nearly 40,000 euros.
Comparison to Competitors
In contrast, cars from China’s Saic, which owns British brand MG, are priced at around 32,500 euros, while models from Renault, Mitsubishi, and Suzuki cost less than 29,000 euros on average. Hyundai and Toyota have also increased prices, but Volkswagen and Renault have reduced them.
A Failure to Understand the Customer
Stellantis’ struggles in Europe mirror its issues in North America, where premium brand Jeep has seen prices skyrocket. Buyers are shocked by the significant price hikes, which have made Jeeps unaffordable for many. The company’s failure to understand its customer base has led to a decline in sales.
New Models and a Shift in Strategy
Stellantis plans to launch around 20 new models in the coming months, aiming for a 20% market share in the European Union. These include the Citroen C3, which starts at 23,000 euros in its electric version. However, it remains to be seen if this shift in strategy will be enough to regain lost ground.
The Rise of Asian Rivals
Fierce competition from Asian rivals, including Hyundai and Toyota, has exacerbated Stellantis’ problems in Europe. Chinese automakers, which account for around 5% of European auto sales, are expected to command a 12% market share by 2030. Stellantis’ complexity, with 14 brands globally, has also hindered its ability to offer clearly differentiated products.
A Call for Change
Dealers and analysts agree that Stellantis needs to reassess its pricing strategy and focus on understanding its customer base. With the company’s shares down 7% and its market share declining, it’s clear that a change is necessary to regain its footing in the European market.
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