Stellantis to Trim 100K Vehicles from North American Inventory

Stellantis, the parent company of Chrysler, is aiming to reduce its North American vehicle inventory by 100,000 units by early 2025. Chief Financial Officer Natalie Knight disclosed this plan during a recent virtual conference hosted by BofA Securities, noting that approximately 40,000 units were already eliminated in July and August.

Knight emphasized the importance of improving Stellantis’ North American operations, stating, "We are living in very difficult times where there will be winners and losers, and a lot of being the winner is about being the last man standing." The strategy includes strict management of pricing and inventory as the company transitions to electric vehicles.

The inventory reduction comes amid declining sales and profits, especially in North America. At the end of the first half of 2024, the company’s total inventory stood at approximately 1.4 million vehicles, coinciding with a 40% drop in adjusted operating profit due to weak performance in this critical market.

Stellantis is under increasing pressure from shareholders, dealers, and unionized workers to address its worsening financial situation. The company also faces the looming threat of a strike from the United Auto Workers (UAW) union, which has begun preparing for a potential nationwide walkout. Knight remarked, "When times are tough, you get friction everywhere," and suggested that 2024 should be viewed as a transitional period rather than a new baseline for the company.

Stellantis CEO Carlos Tavares recently visited the United States to devise a plan to revitalize the company’s North American operations. As part of his cost-cutting initiatives, Tavares has implemented workforce reductions, affecting both salaried employees and factory workers.

Knight reiterated the company’s commitment to restructuring, stating that the goal is to source 80% of its supplies from low-cost countries by 2028, which is expected to significantly reduce overall costs, according to US News.

In addition to cutting inventory, Stellantis has started to reduce prices on select models, including the Jeep Grand Cherokee and Jeep Compass. Knight acknowledged the challenges faced in the first half of 2024 but expressed optimism for recovery, projecting that sales of new models could account for 15-20% of revenues in the second half of the year.