Stellantis Disappoints, Vows to Do Better

The beleaguered Stellantis conglomerate of automaker brands including Jeep, Ram, Dodge, and Chrysler is “grinding through a transition,” offering incentives and adjusting new model pricing as it tackles its inventory problems and a sales slump.

So says Doug Ostermann, the company’s new CFO after the ousting of Natalie Knight amid a flurry of executive turnover and shuffles. CEO Carlos Tavares is trying to fix the mess that Stellantis has become, only a year after it was reporting enviable profit margins. Tavares has tried to address shortfalls with executive shuffles, production cuts, incentives, and price reductions. It has taken a toll on him personally, as he has said he will retire when his contract expires in early 2026.

Stellantis reported third-quarter revenue and shipments that were even worse than expected. Net revenue of $35.8 billion was down 27 percent and shipments of 1.15 million were down 20 percent compared with a year ago. While most major markets suffered, the real problem area is North America, the region relied on to drive profits.

There are several reasons. Pricing was too high, marketing failed to generate awareness and interest in new models, and there are gaps in the lineup with the discontinuation of vehicles such as the Jeep Cherokee and Dodge Charger and Challenger with longer-than-planned gaps until new models launch. Things are also dicey in Europe where the onslaught of affordable EVs from China are rocking the market.

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Cutting Inventory, Prices

Under Tavares, Stellantis is working to reduce inventories that have grown unmanageable, especially in North America where shipments were down 36 percent. Prices have been higher than the competition, leading to a 20 percent drop in U.S. sales from a year ago and down 12 percent from the second quarter, upsetting dealers who have cried out for pricing relief to move more metal.

Tavares acquiesced, allowing aggressive incentives on 2024 and older models. Some of the inventory buildup was during labor negotiations in 2023 so dealers would not run out if there was a protracted strike. And some were stockpiled, notably the Dodge Charger and Challenger, to cover an extended changeover period until their replacement models.

There have been production cuts. This week workers at the Jefferson plant in Detroit that makes the Jeep Grand Cherokee and Dodge Durango learned of a five-day shutdown that runs through Nov. 1. The automaker also laid off about 1,100 employees at the Warren Truck Assembly plant earlier this month with the end of production of the Ram 1500 Classic, which is a previous-generation model that Ram continued to offer as a more affordable, legacy truck.

Making Some Progress

Progress is being made, says Ostermann, who assumed his new position two weeks ago and has relocated to the U.S. Total inventory in the quarter was reduced by 129,000 vehicles, including a 51,000-unit reduction in the U.S. in the quarter with a further cut of 30,000 cars in October. The target is to reduce inventory by 100,000 units in the U.S. by the end of November.

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Stellantis has also adjusted pricing on some 2025 models, including three new Jeeps. Ostermann did not specify which ones. New products on tap include the Jeep 2025 Wagoneer S electric SUV which is in its early launch period, the electric 2025 Ram 1500 REV and Ram 1500 Ramcharger range-extended pickup, and the Dodge Charger Daytona that is in early production and is offered with a choice of powertrains.

In Europe, Stellantis is fighting Chinese competition with its own Chinese joint venture, Leapmotor, which is expanding its product portfolio.

Tavares the Cost Cutter

Tavares has a laser focus on cost-cutting. He has offered buyouts to white-collar workers, and Stellantis also plans to close its proving grounds in Arizona by the end of the year. The company is in legal fights with suppliers over price increases and continues to battle the UAW over delays to retool plants and launch new products.

Despite all these actions, Stellantis now expects margins of 5.5-7.0 percent for the year, down from prior expectations in the double digits. Ostermann said Stellantis still sees a lot of opportunity ahead with its portfolio of new vehicles on architectures that allow them to be offered with multiple powertrains, but said the automaker has a lot of work to do to realize the potential.