Stellantis is pushing forward with capacity adjustments in Europe, considering selling or sharing four factories.

According to informed sources, Stellantis (STLA.US), the maker of Peugeot and Citroen, is actively working to address overcapacity issues and has identified four European factories that could be sold or shared, including the Rennes factory in France. Sources indicate that the manufacturer has started negotiations with potential partners or buyers; representatives from Chinese Dongfeng Motor Group recently visited the Rennes and Madrid factories. The visit from Dongfeng also included visits to Stellantis' facilities in Italy and Germany. The two companies are currently discussing resuming partnership agreements, which could involve jointly producing cars in Europe and China. It has not been decided yet which specific factories will be involved, and negotiations are subject to change with no certainty that agreements will be reached at any of the sites. Previously, a joint venture between the two companies in China faced difficulties. Other Chinese manufacturers have shown interest in these factories, potentially leading to separate agreements with multiple parties. The current focus of negotiations reportedly revolves around sharing facilities to utilize idle capacity in exchange for technological access, with the potential of selling one or more factories. Stellantis stated that discussions with a range of industry participants globally are part of its standard business processes but declined to comment further. Sources revealed that the company has informed the French and Italian governments about the surplus production capacity involving four factories in Europe. These factories reportedly include the Rennes factory, the Cassino factory in central Italy, and the Madrid factory. Stellantis, the automotive manufacturer owning Fiat and Jeep, operates around 20 vehicle assembly plants in Europe, making it the second largest automotive manufacturer in the region after Volkswagen. The offices of French President Emmanuel Macron and the French Ministry of Finance did not immediately respond to requests for comment. The office of Italian Prime Minister Mario Draghi declined to comment. The group has decided to restructure at least one factory, with the Poissy factory near Paris slated to stop car production after 2028. These changes will result in job cuts and affect suppliers like Lear Corporation, Forvia SE, and OPMobility. Some unions are organizing protests on Thursday to oppose this decision. Transactions involving Chinese entities in France will face scrutiny due to the upcoming presidential election next year. Meanwhile, the Italian government has shown openness to the idea. When asked about Dongfeng's interest in Stellantis' base in Cassino, Italian Minister of Industry Gianluca Urso stated that Italy would "open the door to foreign investors willing to bet on our country." Stellantis Chairman John Elkann and CEO Carlos Tavares have been working on solutions to address overcapacity in Europe as part of their wide-ranging business review. Closing factories in the region is both sensitive and costly politically due to demand remaining significantly below pre-pandemic levels and consumers being cautious about purchasing cars. Volkswagen abandoned plans to close several facilities in Germany last year after facing opposition from worker representatives. Although the declining production at the Cassino factory in Italy has been under scrutiny for months, the Rennes factory in western France has recently been recruiting employees for the production of the new Citroen C5 Aircross. Sources indicate that Elkann and Tavares are attempting to diversify the potential impact on local employment and suppliers by selecting factories from different countries. The group is slated to announce its new strategy at a capital markets day next month.