Stellantis boss hails ‘massive untapped potential’ in Gulf

 All images: Stellantis

The automobile giant Stellantis, whose brands include Fiat, Chrysler and Jeep, is aiming to nearly double its share of new vehicle sales in the GCC this year, its regional head has told AGBI.

The multinational car maker, which was formed in 2021 through a merger of Peugeot in France and Fiat Chrysler of Italy and the United States, has sizeable sales and manufacturing operations in the Middle East and Africa (MEA).

Stellantis is the fourth biggest car maker in the world, with a market share of more than 18 percent in Europe last year. The 2023 figure for the GCC was just 2.5 percent. 

Samir Cherfan, chief operating officer of Stellantis Middle East and Africa, said he hoped to increase this to 4 percent this year. His longer-term target is a 12 percent share of the Gulf market.

“We have massive untapped potential in the Middle East,” Cherfan said.

The car maker’s US brands, such as Jeep, Dodge and Ram trucks, will propel sales growth in the Middle East, according to Cherfan. These brands would eventually account for about 60 percent of sales within the sub-region, he said.

The Middle East, including the six-member GCC, is the most profitable part of its MEA operations, Cherfan said, providing 25 percent of sales revenue but 40-45 percent of profits.

Across the Middle East and Africa, Stellantis accounted for 15 percent of new car sales in 2023, up three percentage points year on year. Growth was led by the Fiat, Peugeot and Opel brands. The company ranked second among auto makers, behind Toyota.

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Stellantis sold 614,000 units across the MEA in 2023, up 48 percent from 415,000 units in 2022.

Cherfan described the business as a significant player in the region, adding that it was aiming for leadership. “We are focusing on value creation by being deeply rooted in the countries in which we operate,” he said.

Toyota’s market share in the MEA region is about 18 percent. South Korean automakers combined have a share of about 13 percent, while their Chinese counterparts have 9-10 percent, Cherfan estimates.

Across the MEA region, vehicle sales totalled around 4,200,000 last year, he said.

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To be in a leadership position, a company needed to sell 800,000 vehicles, Cherfan said. He predicted Stellantis could achieve this in 2024, adding that his target was a 22 percent market share in the MEA region by 2030.

Stellantis wants eventually to raise its production capacity in the MEA region to 1 million vehicles a year, from 650,000 last year.

To achieve this, the company is investing €300 million ($324 million) to double its maximum output in Morocco to 400,000 units, and starting production at plants in Algeria and Egypt. These will eventually make 90,000 and 60,000 vehicles per year, respectively. Capacity at its Turkish facilities is 420,000 vehicles a year, while South Africa’s will be 90,000.

“In South Africa, you need to produce locally because if not the tax barriers will kill you. You cannot be competitive,” Cherfan said. “Algeria is the same. If you want to operate in Algeria, you need to be a local player, you cannot just come and sell. You need to create value.”

The company spends around €6 billion a year on parts made in the MEA. In the long term, it aims to sell 1 million vehicles in the region, of which 90 percent will be made locally.

Its facilities in Morocco and Turkey produce vehicles at the same cost of parts as Chinese manufacturers in their domestic market, which is markedly cheaper than in Europe.

Stellantis is building two factories in Egypt that will make vehicles mostly for domestic sale.

“If you want to exist in Egypt, you need to create value in Egypt and we have a plant that enables us to do so,” Cherfan said. “Morocco and Turkey are extremely efficient sourcing bases for these markets themselves, but also for regional needs.”

Stellantis’ MEA 2023 full-year net revenue was €10.6 billion, up 63 percent year on year. The company has doubled its MEA turnover while also reducing its fixed costs since the merger in 2021.