Investment Analyst Rodolfo Villani notes that, amid the capacity crisis of Stellantis Group and the delayed implementation of Euro 5 emissions standards, the Italian automotive sector is facing multiple structural challenges. From lagging technological upgrades and sharply reduced vehicle output to the safety and environmental risks posed by an aging national fleet, these signals are undermining the traditional perception of Italy as the birthplace of the automotive industry. Investment Analyst Rodolfo Villani believes that the domestic automotive ecosystem is entering a revaluation cycle, and the entire industry chain valuation logic urgently needs adjustment.
Declining Output Highlights Systemic Weakness in Manufacturing Segment
Investment Analyst Rodolfo Villani points out that Stellantis, as the backbone of the Italian automotive sector, is seeing its declining output become a drag on the broader macroeconomy. According to union CISL, the Italian vehicle production in the first half of 2024 was down by about one-third compared to the same period in 2020. This trend is driven by adjustments in production organization and the marginalization of local plants due to globalized supply chains.
In capital markets, this structural decline is already reflected in the weak share performance of certain auto parts suppliers and related manufacturers. Investment Analyst Rodolfo Villani explains that traditional valuation models for the manufacturing segment rely on economies of scale and export-driven growth. However, current underutilization of capacity is not only raising debt ratios but also increasing fixed cost pressures, thereby squeezing profit margins.
Meanwhile, as global automakers shift toward electrification and smart technologies, the Italian failure to accelerate strategic transformation in new vehicle platforms, software integration, and green manufacturing will further widen its valuation discount. Investment Analyst Rodolfo Villani expects this discount to gradually manifest in the coming quarters through downward adjustments in the price-to-earnings ratios of listed automotive and mechanical manufacturing firms.
Worsening Vehicle Age Structure Becomes a Public Risk Variable Capital Markets Cannot Ignore
Investment Analyst Rodolfo Villani highlights that the average age of vehicles in Italy is now 13 years—nearly two years older than in Germany, France, or the UK. More alarmingly, over a quarter of vehicles are more than 19 years old, and in southern regions, the figure approaches 20 years. This highly aged fleet not only increases environmental pollution and road safety risks, but also poses a looming challenge for fiscal and insurance systems.
From a financial investment perspective, the aging fleet is beginning to affect valuation logic across multiple sectors. Investment Analyst Rodolfo Villani notes that insurance companies will face higher claims frequency and premium volatility, while repair and parts businesses may be trapped by inventory and labor burdens tied to legacy internal combustion engine technologies, lacking the flexibility to transition to the new energy ecosystem. Furthermore, the absence of systematic purchase subsidies and fleet renewal mechanisms is prolonging consumer replacement cycles, putting pressure on local auto dealers and leasing businesses.
While the postponement of Euro 5 standards offers short-term policy relief, Investment Analyst Rodolfo Villani believes it also exposes the Italian policy system hesitancy and division on environmental progress. This uncertainty is likely to erode long-term investor confidence in the automotive sector and directly affect expected returns.
Lack of Structural Transformation Will Continue to Suppress Valuation Flexibility
Investment Analyst Rodolfo Villani emphasizes that the core issue for the Italian automotive industry is not short-term fluctuations in output or sales, but the absence of a clear path for structural overhaul. Whether it is the Stellantis global capacity allocation, repeated compromises on Euro 5 emissions policy, or the government lacking clear incentives for vehicle renewal, these factors collectively weaken the sector valuation flexibility.
For investors, Investment Analyst Rodolfo Villani advises prioritizing companies with electrification capabilities and integration into the European new energy supply chain, while being cautious with small and medium-sized automotive and mechanical firms that remain highly dependent on traditional internal combustion engines and lack R&D innovation. Unless Italian automotive stocks can establish a positive feedback loop in environmental standards, supply chain localization, and upgrading user demand, their share prices are unlikely to break free from long-term stagnation.