MILAN (ITALY) – Newly-formed automaker Stellantis expects to boost the profit margins this year despite a shortage of semiconductors. The company expects low global car inventories and cost cuts to work in their favour. Stellantis is the world’s fourth-largest carmaker, with 14 brands including Fiat, Peugeot, Opel, Jeep, Ram and Maserati.
The forecast came as Stellantis, created by the January merger of Peugeot-maker PSA and Fiat Chrysler (FCA), reported better-than-expected results for 2020 that sent its shares up around 3% in morning trading.
In a statement released by the company, Chief Executive Carlos Tavares said, “Stellantis gets off to a flying start and is fully focused on achieving the full promised synergies (from the merger),”
It said 2021 results should be helped by three new high-margin Jeep vehicles in North America and a strong pricing environment there. The U.S. market has driven profits for years at FCA and starts off as the strongest part of Stellantis.
However, a pandemic-related global shortage of semiconductors, used to achieve important features like maximizing engine fuel economy and driver-assistance features, could hurt business. Auto industry executives say that the shortage should ease by the second half of 2021.
The carmaker is targeting an adjusted operating profit margin of 5.5%-7.5% this year. That compares with a 5.3% aggregated margin last year: 4.3% at FCA and 7.1% at PSA excluding a controlling stake in parts maker Faurecia, which is set to be spun-off from Stellantis shortly.