Moody’s and S&P cut Stellantis to junk bond brink

Moody’s and S&P Global downgraded Stellantis to their lowest investment grades on 10 February, placing the automaker just one notch above the junk bond status designated to Nissan last year. S&P cut Stellantis’ long-term rating to BBB- from BBB with a negative outlook, while Moody’s lowered it to Baa3 from Baa2 citing weaker-than-expected profitability and cash flow.

The downgrades come just days after Chief Executive Antonio Filosa’s announcement of €22.2bn (US$26.5bn) in writedowns, much of which relates to unwinding predecessor Carlos Tavares’ heavy bets on electric vehicles (EVs). Stellantis also disclosed far weaker earnings than analysts had anticipated, sending the stock plunging 25% in a single day on the Milan exchange.

The automaker has warned it now expects to report a second-half deficit of as much as €1.5bn, forecasting a mid-single-digit revenue increase alongside a low-single-digit adjusted operating income margin for 2026. Alongside the writedowns, Stellantis is selling its 49% stake in a Canadian battery joint venture to partner LG Energy Solution for just US$100, efectively wiping out virtually all of the US$980m the automaker had invested.

Stellantis has lost almost €70bn (US$83bn) in market value since March 2024 following a inventory crisis in North America, described by dealers in catastrophic terms. A mixture of pricing and weak demand has left dealership lots overflowing with unsold vehicles, many of them EVs. The company’s US market share has slumped to around 8% from 12.5% in 2020, culminating in Tavares’ abrupt resignation in December 2024 after dealer groups and labour unions accused him of destroying American brands through short-term cost-cutting.

After a year of course correction efforts, Filosa is now demanding 25% US sales growth from dealers in 2026, supported by a record marketing spend and a flurry of new or refreshed models including the Jeep Cherokee, Grand Wagoneer and Grand Cherokee. The automaker has pivoted away from EVs, bringing back Hemi V-8 engines as well as a new focus on hybrids. More broadly it is readjusting its pricing lineup to clear inventory of its older and less popular models.