Stellantis: Profit Decline in 2024, Impact on UAW Profit Sharing
Stellantis reported an 18% drop in net profit for 2024, impacting UAW profit-sharing bonuses, which fell 56% to $5,670 per worker. North American struggles and a 35% drop in China sales contributed to the decline. Meanwhile, GM and Ford maintained stronger profit-sharing figures, fueling worker dissatisfaction. With leadership changes ahead and strategic investments in EVs and China, Stellantis aims for a turnaround in 2025.
2024 Financial Results: Stellantis Faces Challenges
Stellantis is confronting multiple significant challenges. In North America, traditionally the group’s most profitable market, performance was particularly disappointing. The operating margin in this region dropped to 9.3%, compared to 15.4% the previous year, a decline that substantially affected the group’s overall results.
This underperformance can be attributed to persistent issues in inventory management and pricing strategy, as well as increased competition in the American market. Vehicle sales decreased by 2% in volume, with particularly marked declines for iconic brands like Jeep and Ram.
Beyond the specific difficulties in the North American market, Stellantis is also facing declining global demand and considerable challenges in China, where the group struggles to establish itself against local manufacturers and well-established international competition. Sales in China fell by nearly 35%, reflecting the group’s inability to capitalize on this crucial market.
Significant Decrease in Profit Sharing for UAW Members
As a direct consequence of these declining financial results, Stellantis announced a significant reduction in profit-sharing payments for UAW members. For 2024, unionized workers will receive an average of $5,670, representing a substantial 56% decrease from the $12,950 paid out the previous year.
This drastic reduction represents a severe blow for the approximately 38,000 eligible workers at Stellantis. Payments will be distributed on March 15, 2025, but disappointment is palpable among employees who had benefited from larger amounts in recent years.
Stellantis management has emphasized that this decrease accurately reflects the company’s performance in North America and adheres to the terms of the collective agreement signed with the UAW. However, this explanation offers little comfort to workers who were counting on these bonuses to improve their financial situation.
Factors Influencing the Decrease in Profits
The calculation of profit sharing is directly tied to the profit margin achieved by Stellantis in North America, in accordance with the labor agreement negotiated with the UAW in 2023. Under the terms of this agreement, each percentage point of profit margin generates a payment of $900 per eligible worker.
With a margin of 9.3% in North America for 2024, compared to 15.4% the previous year, the math is unforgiving: lower profits mean less money to share with workers. This transparent formula leaves no room for interpretation and directly links employees’ fortunes to company performance.
It should be noted, however, that the 2023 agreement with the UAW made certain adjustments to the profit-sharing mechanism. The new contract notably increased the amount paid per percentage point of margin (from $800 to $900) and expanded eligibility to certain categories of temporary workers. These improvements, while important, are not enough to offset the substantial decline in profitability.
Comparison with Other Automakers
The situation at Stellantis contrasts sharply with that of its American competitors. General Motors announced profit sharing of $10,250 for its unionized workers, while Ford paid $9,150 to its UAW member employees.
These significant gaps reflect the disparate performances of the three major American automakers. Unlike Stellantis, GM and Ford managed to maintain higher levels of profitability in North America, despite a generally challenging economic environment.
This difference in treatment risks increasing discontent among Stellantis workers, who may feel disadvantaged compared to their counterparts at competing manufacturers. Stellantis management will need to address this significant challenge to maintain employee motivation and engagement in the coming months.
Future Outlook for Stellantis
Facing these challenges, Stellantis finds itself at a pivotal moment in its history. The group is currently searching for a new CEO following the announcement of Carlos Tavares’ departure, planned for early 2026. This leadership transition comes at a critical time and raises questions about the company’s future strategy.
Despite current difficulties, Stellantis maintains ambitious goals and forecasts a return to profitable growth beginning in 2025. The group is relying on several strategic initiatives to right the ship, including the deployment of new multi-energy platforms that will allow more flexible production adapted to different regional demands.
The partnership with Leapmotor International also represents a promising development axis, particularly for strengthening the group’s presence in China and in the electric vehicle segment. Stellantis invested €1.5 billion in this joint venture, demonstrating its unwillingness to abandon the Chinese market despite the difficulties encountered.
In conclusion, 2024 marks a difficult turning point for Stellantis, with tangible repercussions on profit sharing for UAW workers. While the group has undeniable assets to bounce back, including its diversity of brands and global presence, the challenge will be to quickly transform these potentials into concrete results. Time will tell if the automaker can find the path back to profitable growth and, consequently, once again offer more substantial amounts to its employees in future profit-sharing distributions.
