Stellantis N.V. 2026 Jefferies Global Industrials Conference

No, you go. Yeah. Okay, go ahead.

Oh, perfect. Thank you, Philippe, first of all, for hosting us and for having me and my team here today. We follow you. I believe it is very important and very exciting for me, so thank you for that. If you don't mind, I will start with some opening remarks.

just to set up a little bit what I think is happening. I will answer to your question. As opening remark, let's start from the fact that we are a few months away from May.

In May this year, we announced that we share with investors our plan for the future, FaSTLAne 2030. This is a plan that will restore immediately profitability into Stellantis, and will drive Stellantis five years from now to be a business that will generate around from 8%-10% of AOI margin. This plan relies on investment of EUR 60 billion that we launch for our brands and our regions, up to 60 new products. It will increase market coverage in each one of the important regions, starting from North America into Europe, South America, Middle East, and Africa, and APAC as well. This is the five-year plan, right? Obviously we understand that investors are very keen into short and the mid-term results, which is very important. Let's talk about the first three years.

The first three years, 2026, 2027, 2028, to add a very clear three first steps into the journey. 2026 is the year of recovery, right? The recovery already started. I will be able to share some numbers. As you see, in each one result. It is also the year where we start organizing our cost recovery plan, which is VCP, Value Creation Program. Value Creation Program today engages 3,000 people in Stellantis, already was able to map 9,000 initiatives. Those initiatives will be launched in 2026. So 2026 is recovery and start of VCP. 2027 is the year where we will benefit of 40% of maturity of those initiatives. So 2027 is the year where we will receive from VCP minimum EUR 2.4 billion cost saving. We will build results on top of that.

2028 is the year when we will have full maturity of VCP, which is EUR 6 billion cost saving run rate for 2028 and onward. Plus, we will have the first meaningful wave on new products that is coming from the EUR 60 billion investment that I mentioned before. Those are the first three steps of our five years journey. We are highly confident that today we are on track with those first three steps. So we are on track to deliver guidances that include, for instance, 2027, free cash flow positive, that include a commitment of EUR 3 billion free cash flow positive in 2028. Obviously we understand that the recovery that we start in H1, in the eyes of analyst, but also in our willingness, is not fast enough. I want to maybe now answer to your question, which is, why is that?

What we are doing around it? Globally, we have three major gaps when we compare to our competitors, to our main competitors. We have a lack of products. In North America, for instance, our product line-up has a coverage of 55% of the market. FaSTLAne 2030 will address that, mainly starting from 2028 by going from 55% to 90%. The history is very similar to the other region. Then we have a gap of cost. What we have been able to understand from many benchmarks and many tear downs that we did in our company with competitor's vehicle, is that we have a high single-digit cost gap with them. In some cases, this is average. In some cases, some product is also low double digit. We will address cost as we are doing already today with VCP, Value Creation Program.

Then we have a quality gap. This quality gap is driving many things. Obviously, problem with customer that we want to highly protect, and then total warranty cost and campaign cost. We are addressing that through our quality turnaround plant that is already producing result. One of the result that we have in our hands is that quality in North America improved 38% year over year. Stellantis is the fastest improving OEM in quality in North America, and improved also in Europe of 24%. Results that we are producing now, they're already showing the recovery. They will accelerate it through VCP fast with cost saving, through quality turnaround plant fast, with quality improvement that's already happening, and through new products that will start populating our line-up from 2028 onward.