By Giulio Piovaccari and Nick Carey
MILAN (Reuters) — A recent war of words between Italian Prime Minister Giorgia Meloni and Stellantis (NYSE:STLA) CEO Carlos Tavares has exposed a tough new reality: Europe's one-time homegrown national automakers have become global players ready to exploit the EU's overcapacity of car factories to obtain better government deals.
Stellantis, created by the combination of France's Peugeot (OTC:PUGOY) maker Peugeot PSA, Italy's Fiat and Detroit's Chrysler, accounts for virtually all of Italy's car production. Fiat output has been falling as European sales have stagnated and Stellantis has shifted production to other countries in its sprawling global network.
Stellantis' capacity utilisation rate at its European factories stood at 56% last year, down from 64% in 2019 and well below the 71% rate at Volkswagen (ETR:VOWG_p), according to GlobalData data provided to Reuters. Automakers aim for at least 80% capacity utilization.
Stellantis is using its excess production capacity for leverage in bargaining for subsidies and policy support from Rome and governments in other countries. In the United States, state and federal officials offered subsidies to persuade Tavares not to close a Jeep plant in Illinois, which will now be used to build a new midsize pickup truck that fills a gap in the company's U.S. model lineup.
The world's third-largest automaker has so far allocated more European electric-vehicle production to France, Justin Cox, director of global production at GlobalData, told Reuters. The company's North American truck and Jeep SUV operations generate the majority of the group's profit. Stellantis will report 2023 financial results on Thursday.
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