Over the past few months, Stellantis (STLA) , the multinational parent company of once-beloved American auto brands like Chrysler, Dodge, and Jeep, has been dealt a series of bad cards.
Following a bleak first-half earnings call in July, an unfortunate pattern of events and drastic measures followed, including voluntary buyouts for white-collar employees and layoffs of more than 2,450 assembly-line workers following the discontinuation of the Ram 1500 Classic.
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Meanwhile, a coalition of US-based Stellantis-brand dealers has labeled the state of Stellantis' affairs a "disaster," and Shawn Fain and the United Auto Workers have targeted the automaker for failing to follow through on their contractual obligations.
However, a new problem is adding to the growing list of issues the automaker faces.
Stellantis
A dangerous Jeep defect triggers massive recall
In the midst of Stellantis's woes, the multinational automaker has issued a massive recall regarding some of its most popular vehicles.
In separate announcements from the automaker and the National Highway Traffic Safety Administration (NHTSA), a recall has been issued worldwide affecting 194,000 units of the Jeep Wrangler and Grand Cherokee 4xe plug-in hybrids.
According to the NHTSA, the recall affects 154,000 plug-in hybrids in the United States, including 118,230 Jeep Wrangler 4Xe models and 35,802 Jeep Grand Cherokee 4Xe models, which are at risk of catching fire.
The federal regulator states that the defect is in the high-voltage lithium-ion battery unit used to power the hybrid drive unit. In documents filed by Stellantis with the NHTSA, battery supplier Samsung SDI (which is partially owned by Samsung Electronics (SSNLF) ) told the automaker in August that the cause of the defect is "separator damage combined with other complex interactions within the cell."
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In a Sept. 30 statement, Stellantis reported that the automaker knew about the defect. It noted that "a routine company review of customer data led to an internal investigation that discovered 13 fires" and that "all vehicles were parked and turned off" when they occurred.
The NHTSA's Office of Defects Investigation (ODI) began its own investigation in September, as it received nine reports of fires and one related injury, with most of the alleged incidents occurring in relatively new Jeeps.
The recall follows a 2023 recall of 32,000 Wrangler 4xes, which called for a software update. Stellantis said the procedure was "ineffective at detecting certain abnormalities," as some vehicles that caught fire were treated with the software update.
Stellantis estimates that 5% of affected vehicles have this defect. Still, they and the NHTSA advise owners of 2020-2024 model year Jeep Wrangler 4xes and 2022-2024 Jeep Grand Cherokee 4xe plug-in hybrids to park outside and away from buildings or other vehicles until they get recall repairs completed.
Additionally, the automaker said that the fire risk is reduced when the battery is completely empty, and owners are advised to refrain from recharging. Stellantis says that a remedy is imminent, and owners will be notified when they can schedule service.
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Inventory woes and plummeting sales stall Stellantis' progress
The recall news rubs more salt into Stellantis' wounds, giving car buyers yet another reason not to patronize an automaker with existing inventory problems.
According to an analysis by auto shopping website CarEdge, six out of the ten slowest-selling cars in the U.S. belong to Stellantis properties. Some of the worst-performing cars have a nearly two-year supply rotting away on dealer lots across the country.
In an announcement made early on Sept. 30, Stellantis said it "accelerated its planned normalization of inventory levels in the U.S.," prioritizing its target to have "no more than 330,000 units of dealer inventory by year-end 2024" instead of 2025.
In addition to reduced factory output, Stellantis says it plans to offer more incentives and discounts "on 2024 and older model-year vehicles."
Nonetheless, Stellantis is doing whatever it can to move metal, as new numbers show that it is struggling to do so.
In new sales data released on October 1st, Stellantis reported that it sold 305,294 cars across its portfolio in the U.S. during Q3 2024 — a 19.8% drop from the same period last year and an 11.5% drop from the last quarter.
While the numbers spell doom, the automaker defends that an "aggressive incentive program," or bigger and bolder discounts, implemented early in the quarter shows results, with dealer inventory reduced by 50,000 units, or 11.6%.
“These cross-brand incentives, which will continue through the end of the year, also helped to deliver consecutive month total share growth in Q3 from 7.2% in July to 8% in September," Stellantis U.S. retail sales head Matt Thompson said in its statement. "We continue to take the necessary actions to drive sales and prepare our dealer network and consumers for the arrival of 2025 models.”
Stellantis NV, which trades under the ticker STLA on the New York Stock Exchange, is down 0.07% from the opening bell, trading at $13.70 per share at the time of writing.
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