Stellantis STLAM, rated BBB (high) with a Negative trend, has announced temporary closures at six of its European manufacturing plants because of weak market demand and excess inventory. The affected sites include Poissy in France, Pomigliano in Italy, Eisenach in Germany, Zaragoza and Madrid in Spain, and Tychy in Poland. These shutdowns, ranging from five to 21 days, affect production of key models such as the Fiat Panda, Alfa Romeo Tonale, Opel Mokka and DS3, and the newly launched Alfa Romeo Junior.
They also show that European original equipment manufacturers are being confronted by excess capacity in Europe from weak demand. Stellantis’ production interruptions follow the stagnating trend in the European automotive market as well as global headwinds caused by US tariffs and increased competition from Chinese OEMs. Earlier this month, Volkswagen AG, rated A (low) with a Negative trend, also announced temporary plant closures in Germany and the US to better manage supply with new vehicle demand.
According to the European Automobile Manufacturers’ Association, in the first half of 2025, new passenger car registrations in the European Union (EU) declined by 1.9% compared with H1 2024, reflecting broader economic challenges and shifting consumer preferences. EU car production fell by 2.8% to just less than six million units, further reflecting weaker external demand and persisting cost pressures. At the same time, global production increased by 3.5% and China’s output by 12.3%; vehicle sales from Chinese manufacturers now account for 6% of total European sales. Stellantis’ EU market share declined modestly during the first half of 2025 to 16.3% from 18% the prior year, although the Group has comfortably maintained its number-two market position.
In terms of units, the Group’s EU registration volumes declined by 11.1%, led by Fiat, Opel/Vauxhall, and Citroen. Overall, we expect challenges for Stellantis—and for other European automotive OEMs—to persist due to a combination of weak European demand, the very competitive pricing environment and increased competition from China, and continuous high investment needs.
Meanwhile, manufacturing overcapacity is likely to negatively affect operating and financial performance in the near to medium term. We also do not expect the US market, despite quite resilient vehicle sales, to offset challenges and weaker performance in other regions because of import tariffs and their operational and financial implications. Consequently, we have revised our trends on three European manufacturers, Stellantis, Volkswagen, and BMW, rated A high with a Negative trend, to Negative this year.
Morningstar DBRS issued this report on Sept. 25.
Rating decisions are made by Morningstar DBRS and not by its parent company, Morningstar, Inc. In the event of any discrepancy, the wording of the original Morningstar DBRS report shall always prevail.
