Stellantis is accelerating a major strategic shift to address its significant overcapacity in Europe, with discussions underway to sell or share factory assets.
Stellantis NV is considering the sale or partnership of four European plants to resolve production overcapacity, with China’s Dongfeng Motor Group emerging as a key potential partner in a move that could reshape the continent's auto manufacturing landscape.
"Italy is open to foreign investors who want to bet on our country," said Industry Minister Adolfo Urso this month, commenting on Dongfeng's potential interest in the Cassino plant.
The potential sites include factories in Rennes, France; Madrid, Spain; and Cassino, Italy, according to people familiar with the matter. Dongfeng representatives visited the French and Spanish facilities this month, signaling that talks to revive a partnership with Stellantis are advancing.
The negotiations, which could involve joint vehicle production or the outright sale of one or more plants, come as Stellantis grapples with excess capacity equivalent to four factories in Europe. A deal would mark a significant European expansion for a Chinese automaker and could have major implications for the region's supply chains and employment, with a new strategy expected at Stellantis's capital markets day on May 21.
As Europe's second-largest automaker after Volkswagen, Stellantis operates approximately 20 vehicle assembly plants across the continent. The current discussions center on a core proposal to trade shared production capacity for access to technology, though the sale of one or more factories remains an option. The choice to spread the candidate plants across multiple countries is seen as a way to mitigate the potential impact on local employment and suppliers.
The situations at the candidate factories vary. The Cassino plant in central Italy has been operating well below capacity for months, while the Rennes factory in France is currently increasing its workforce to meet strong demand for the new Citroën C5 Aircross. The automaker has already announced that its Poissy factory near Paris will cease vehicle production after 2028, a move that will affect suppliers like Lear Corp., Forvia SE, and OPMobility.
For Dongfeng Motor, a deal would represent a significant step in expanding its presence in the European market. The Chinese automaker previously had a joint venture with Stellantis in China that ultimately struggled. The renewed talks, marked by high-level factory inspections, show a substantive warming of relations. Other Chinese automakers have also reportedly expressed interest in the facilities.
A potential partnership also highlights the intricate global supply chains in the automotive industry. For instance, China Automotive Systems (NASDAQ: CAAS), a steering systems supplier, noted in its recent earnings call that sales to Stellantis's worldwide network have been a significant driver of its growth in North and South America, as well as Europe.
The strategic review has drawn concern from labor unions. Italy's Fiom union has called for a meeting with the government ahead of the May 21 capital markets day to secure guarantees on factory and job retention. Multiple unions held demonstrations at several Stellantis plants on Thursday to protest the restructuring.
This article is for informational purposes only and does not constitute investment advice.
