Stellantis Halts Production of Durango and Grand Cherokee Due to Slow Sales

The automobile industry continues to face challenges. Following Ford's recent announcement of lower-than-expected earnings, Stellantis has now revealed that it is suspending the production of its Durango and Grand Cherokee models due to sluggish sales.

Production Pause and Layoffs at Detroit Assembly Complex

The manufacturing operations at FCA's large Detroit Assembly Complex - Jefferson will be halted for a week, according to a report by Motor 1. Stellantis has informed its employees about a 'temporary shutdown' and 'subsequent layoffs'. Mopar Insiders initially published the "Important Notice of Layoff" memo, which stated, "There will be no scheduled production at Detroit Assembly Complex Jefferson" from October 28 to November 1. The Motor 1 report also mentioned that in 2022, the Jefferson complex employed over 5,000 people. However, approximately 200 workers faced permanent layoffs in September. Stellantis stated to Motor 1, "Stellantis continues to take the necessary actions to align production with sales. This includes making production adjustments at the Detroit Assembly Complex - Jefferson. The Company will continue to monitor the situation to assess whether further action is required."

Stellantis' Ongoing Challenges

Stellantis has been facing significant operational challenges this year. Earlier this month, Stellantis Chief Financial Officer Natalie Knight emphasized the need for "drastic measures" to stabilize the finances of Jeep and Ram's parent company. Knight announced, "The Doghouse is back!" This initiative involves a stringent review of purchase requests from external vendors to ensure maximum cost savings. She explained that the doghouse "is the name for much stricter attention and control around purchase requisitions," adding, "If we apply more discipline, we can ensure big savings for the company." The following Monday, Stellantis reduced its margin forecast for the entire year.

Dealer Network Criticizes Leadership

In September, the company's dealer network penned a letter to then CEO Carlos Tavares, accusing him of the “rapid degradation” of the automaker’s brands. Leaders of the US dealer network claimed that Tavares had engaged in "short-term decision making" that boosted the previous year’s profits and increased his compensation but negatively impacted the Jeep, Ram, Dodge, and Chrysler brands.

Bottom Line

The automobile industry, particularly Stellantis, is grappling with numerous challenges, from sluggish sales to operational difficulties and criticism from its dealer network. As the company continues to navigate these issues, it remains to be seen how these developments will impact its future. What are your thoughts on this situation? Feel free to share this article with your friends. Don't forget to sign up for the Daily Briefing, delivered to your inbox every day at 6pm.