How The Parent Of Chrysler Dodge Jeep Ram Lost $2.7 Billion In Just Six Months

I am constantly concerned that the average person has no idea what or who a Stellantis is. Every previous iteration of the company had Chrysler in the name somewhere (FiatChrysler, Daimler Chrysler, Chrysler Corp.), so I’m left writing CDJR in many headlines for The Morning Dump because, for most Americans, that’s how the brand’s dealers represent themselves. All that being said, whether you’re talking about CDJR or Stellantis, the news today is awful.

Like, $2.7 billion awful. This is the inevitable result of poor decision-making from the previous leadership of Stellantis, combined with bad timing. Is it the bottom for Stellantis? Possibly. Turning around a company this big is a bit like one of SWG’s restorations, where the first few steps feel more like going backwards than forwards.

In life, the grass is always greener on the other side, but sometimes that’s because your neighbors just spray-painted that ish. For example, one Chinese brand that seemed to be rising while Stellantis was falling might have made up half of its sales using the “zero-mileage used car” trick.

Japanese automakers, too, seemed in an enviable position until recently. The tariff question has thrown Japanese politics into a bit of disarray, and the results were ultimately mixed. The EU has less of a political problem at this exact moment in time, and is either going to cut a deal with the Trump Administration or push for harsher retaliatory actions against the United States.

What’s Happened To Stellantis?

I don’t take much pleasure in being right, more than a year ago, about Stellantis being a company that essentially doomed itself with short-term decision-making, which resulted in immediate profits at the expense of long-term viability. Then-CEO Carlos Taveres, pictured above enjoying his millions of dollars, may be the only person who did well because of this approach (a result of a compensation package that made no sense).

When I wrote that piece, Stellantis was talking about huge profits. It was clear to car enthusiasts that this was a mirage. The company was squeezing the last money it could out of old platforms in North America, with no obvious direction and few incentives. The pandemic gave the company’s aging cars a new life as people were desperate to buy anything new and, by and large, anything was all Stellantis had to sell on this side of the Atlantic.

To its credit, Stellantis inevitably reorganized and ditched Tavares for a CEO who knows something about the North American market. Instead of building more EVs that no one seems to want, the company is shifting focus back to V8-powered Rams and hybrids. Some of the execs who fled the automaker during the Tavares regime are slowly coming back.

The question is: Has Stellantis reached the bottom? Is the first half of 2025 the harbinger of things to come or the nadir?

Even before the company’s full financials are published next week, a preliminary figure was released to basically warn everyone that it’s not going to be great. Specifically, the company said that it expects it has already lost $2.7 billion through the first half of the year.

A lot of this has to be blamed on the specific cars the company is (or isn’t) selling, with deliveries down 25% year-over-year in Q2 in North America. So what’s going on? Here’s how the company describes its current predicament:

• The early stage of actions being taken to improve performance and profitability, with new products expected to deliver larger benefits in the Second Half of 2025
• Approximately €3.3 billion of pre-tax net charges, primarily related to program cancellation costs and platform impairments, net impact of the recent legislation eliminating the CAFE penalty rate, and restructuring, which are excluded from Adjusted Operating Income⁽³⁾ consistent with the Company’s definition of AOI
• Adverse impacts to AOI from higher industrial costs, geographic and other mix factors, and changes in foreign exchange rates
• The early effects of US tariffs – €0.3 billion of net tariffs incurred as well as loss of planned production related to implementation of the Company’s response plan

Just FYI, AOI is “Adjusted Operating Income,” and is how the company describes its income net of certain types of expenses like interest. A lot of this is focused on North America, because North America is historically where the company made its money (while hoping to not lose too much in Europe).

While tariffs were not necessarily in place for all of the quarter, there are “early effects” noted. The biggest issue here might not be the actual tariff costs but the fact that the company has to reorganize its production. That was going to happen anyway as mentioned in the first bullet point; it’s just happening faster now. There’s also the usual mix of input costs and currency fluctuation.

Did you notice something strange here? The “net impact of the recent legislation eliminating the CAFE penalty rate” bit?

Everyone knows that Congress getting rid of CAFE penalties was to the benefit of automakers, but this is the first time I’ve seen this come up in an investor press release. If I’m reading this correctly, it’s basically admitted that it’ll cost money upfront to retool to build more V8-powered trucks and other vehicles, but ultimately that’ll be worth it for the automaker as it saves money on penalties.

I have mixed feelings about this, even if the logic is sound. Perhaps this is really the bottom for Stellantis.

China’s ‘Zero Mileage Used Car’ Scandal Gets Even Worse

Back in 2022, Neta seemed like one of the biggest and most promising electric car companies in the budding Chinese EV industry. This summer, the company filed for bankruptcy. What happened?

In addition to being caught in a brutal price war, Neta was reportedly one of the worst abusers of the “zero mileage used car” practice that’s been upending an already unstable car market in China. The short of it is that automakers, in varying ways, will register a car as being sold by passing it through a dealer or another company. That way, the company can get incentives and mark the car “sold” even if there’s no buyer for it, with the vehicle then later being sold as a used car.

Many of China’s biggest brands have been popped for allegedly doing this, but Neta might be the most egregious. There’s a big exclusive report from Reuters that singles out Neta and Geely-owned Zeekr, but I’m focusing on Neta because it’s wild stuff:

Neta booked sales early by arranging insurance policies for cars before sending them to dealers, according to records shared with Reuters and a dealer for the brand.

The records contain details for each car and the insurance policies purchased on them, with the names of the insurance agents. Dealers were able to refer to these when they found a buyer to transfer the policy to, according to copies seen by Reuters. The company booked early sales of 64,719 cars this way.

“In Neta’s case, the company made it clear to dealers that the cars were insured ahead of time and therefore counted as sold,” said the dealer, who spoke on condition of anonymity, citing fears of retaliation from the company.

“We had to explain to buyers that the traffic insurance was complementary and remind them it would expire earlier and should be renewed on time,” he said.

But three Neta buyers, who asked not to be named, told Reuters the dealerships had not told them the policies had begun well before the purchase date, only finding out when the policies expired.

What Happened In Japan Last Night?

I spent yesterday trying to take a break from work and recharge, but I did spend a bunch of time following the Japanese elections on my phone. The result? Like a lot of elections recently, incumbents lost ground, but not enough ground for anyone to claim a mandate to do anything.

Per Nikkei Asia:

Japan’s ruling coalition lost its upper house majority in an election on Sunday — after having suffered a similar lower house defeat in October — but Prime Minister Shigeru Ishiba has made clear his intention to go on leading the government.

[…]

Of the 125 upper house seats up for election, the ruling coalition won 47, versus the opposition’s 78. Ishiba’s Liberal Democratic Party lost 13 seats while its coalition partner, Komeito, gave up six.

The chamber has a total of 248 seats.

Including the coalition’s 75 seats that were not up for reelection, the bloc’s upper house presence is down to 122 from 141, three seats short of a majority.

For now, it’ll be Ishiba who is going to lead the tariff negotiations with the Trump Administration, but it’s likely only a matter of time before the LDP dumps him for someone who knows how to win elections.

The EU Is Coming For Our Bourbon

With 50 states, there are a lot of ways for foreign governments to target American senators for reciprocal tariffs if they don’t get what they want out of negotiations. The President decided to blow up the global trade order by threatening increased trade duties on virtually every country, inhabited or not. So far the United States has little to show for it, as these are complicated negotiations that usually take months or years.

The EU seems ready to accept a 10% tariff on most goods, but that might not be enough. If the EU doesn’t get what it wants, it’s going to retaliate, as Bloomberg reports:

The bloc has already approved potential tariffs on €21 billion of US goods that could be quickly implemented in response to Trump’s metals levies. They target politically-sensitive American states and include products such as soybeans from Louisiana, home to House Speaker Mike Johnson, other agricultural products, poultry, and motorcycles.

The EU has also prepared a list of tariffs on an additional €72 billion of American products in response to Trump’s so-called reciprocal levies and automotive duties. They would target industrial goods, including Boeing Co. aircraft, US-made cars, and bourbon whiskey.

It’s also working on potential measures that go beyond tariffs, such as export controls and restrictions on public procurement contracts.

You know when they come for the bourbon, they’re not playing.

What I’m Listening To While Writing TMD

The Last Dinner Party has a new album coming, and the video for “This is the Killer Speaking” is predictably strange. I dig it.

The Big Question

Is this the bottom for Stellantis, or is there another sub-basement?

Top photo: Jeep/Depositphotos.com