Shares in European-American automaker Stellantis (STLA) were higher in pre-market trading today as it reportedly looks to sell or share European factories including to Chinese rivals.
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Four Factories Could Be Sold
It is understood that Stellantis, whose brands include Peugeot, Dodge and Citroen, has identified four of its European factories where it is struggling with overcapacity. It has been reported that the Rennes, France site, Cassino in central Italy and its Madrid, Spain site could be on the block either as a complete sale or as part of a deal to share facilities.
Indeed, according to a Bloomberg report, Stellantis has already started talks with potential buyers and partners with some, such as China’s Dongfeng Motor Corporation, already having toured the plants.
Dongfeng’s interest has analysts excited that it could mean a revival of the pair’s partnership, which could lead to joint car production in both Europe and China.
That would fit in well with a broader trend of global alliances in the sector as automakers seek scale, cost efficiencies, and market access.
Chinese Link Grows
However, it is understood that no decision has yet been made on specific plants and that there is no certainty that a deal will happen on any of the sites.
Other Chinese automakers are said to be interested in the plants and it is possible that Stellantis could sign off multiple deals rather than to just one single group.
Stellantis has a strong relationship with Chinese peers. It was recently reported that Stellantis is partnering with Zhejiang Leapmotor Technology to begin making electric vehicles at a Canadian plant that Stellantis had shut down in Canada. Stellantis has a 21% stake in Leapmotor that it purchased in 2023 for $1.6 billion.
The two automakers also have a joint venture called Leapmotor International in which Stellantis holds a 51% stake.
Stellantis told Bloomberg that it holds discussions with a range of industry players around the world on various topics, as part of its normal course of business.
Is STLA a Good Stock to Buy Now?
On TipRanks, STLA has a Hold consensus based on 5 Buy, 10 Hold and 1 Sell ratings. Its highest price target is $11.75. STLA stock’s consensus price target is $9.14, implying a 7.58% upside.
