It's all about the brand, stupid. Stellantis CMD strategy day note

It seems Stellantis are sleeping with the enemy and risk holding the door open for them, despite saying they are in charge of distributing Leapmotor and DFSK models across Europe as part of both JVs, in which they hold 51%.  It's difficult to see the Chinese agreeing in the long-term narrative which Filosa is pushing: that they will essentially only offer the Chinese JV models in the D-segment, where Stellantis brands have little market coverage, which will prevent cannibalisation and create synergies.  

In terms of Voyah, it remains unlikely that the brand, positioning itself as a premium brand, is going to be a success in terms of large volumes to help Rennes's utilisation. The brand has had a European market presence since 2022, but has failed to deliver more than 1,000 regional units on an annual basis since. The premium end of the market is a hard nut for Chinese no-name brands to crack, as they lack the brand equity that is crucial in that segment. FAW have failed with Hongqi so far, and the same applies to NIO. Polestar, which has had mild success, albeit with a poor channel mix, has likely benefitted from Volvo's white spots in its product portfolio up to now, targeting a similar demographic. These will be filled over the next 24 months by Volvo with the SPA 2/3 rollout, which will likely limit Polestar’s growth. 

However, the strategy of utilising their Chinese partners to bridge the scaling valley of death in transitioning from ICE to BEVs across Europe and to maintain scaling benefits on both sides of the equation appears sound. Also, the fast pace, low cost and agility they have through the Leapmotor deal and how that will help utilisation at two Spanish facilities. The underlying margin outlook remains disappointing though, which suggests a large proportion of the profits will filter back to China rather than be channelled to Amsterdam.

The potential to leverage more of Leapmotor's low-cost,, vertically integrated supply chain, presumably through the STLA ONE platform potentially has a significant upside allowing it to undercut competitors. This will leverage the JV by stealth, and possibly wasn’t priced into the stock price. This also allows them to become more competitive in the MEA region, where they see high growth opportunities. Tata will also help here. They appear to be betting the kitchen sink on their house of brands and using them partly as a facade sitting on top of Chinese tech. The question is, are there brands strong enough in a hyper-competitive volume segment spanning A-C segments? That remains debatable. 

On leveraging dealerships and retail spaces that should please dealerships in a similar way to Volvo and Lynk&Co/Polestar. As the European industry transitions to BEVs, this increase in the scope of models they can service/repair should go some way toward offsetting the lower maintenance revenues they are likely to receive going forward, given the inherent nature of lower maintenance BEVs, widening their customer base.

Scope: Western Europe's 18 Markets: EU Member States prior to the 2004 enlargement, plus EFTA markets Norway, Switzerland, Iceland, plus UK – accounting for 90% of the enlarged European region.

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*Western Europe 18 Markets: EU Member States prior to the 2004 enlargement plus EFTA markets Norway, Switzerland, Iceland, plus UK