Massive Jeep recall is only the latest headache for Stellantis

Over the last 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-0.5 earnings call in July, an unfortunate pattern of events and drastic measures followed, including voluntary buyouts for white-collar employees and layoffs of greater 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.

Nonetheless it, a new problem is adding to the growing list of issues the automaker faces.

A perilous Jeep defect triggers massive recall

Within the midst of Stellantis's woes, the multinational automaker has issued a enormous recall regarding reasonably a lot of its preferred vehicles.

In separate announcements from the automaker and the National Dual carriageway 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.

In keeping with the NHTSA, the recall affects 154,000 plug-in hybrids throughout the US, 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 throughout 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 explanation for 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 shopper data resulted in an internal investigation that exposed thirteen fires" and that "all vehicles were parked and turned off" after they took place.

The NHTSA's Place of business of Defects Investigation (ODI) began its own investigation in September, because it received nine reports of fires and one related injury, with reasonably just a few the alleged incidents happening in relatively new Jeeps.

The recall follows a 2023 recall of 32,000 Wrangler 4xes, which often is often known as for a software update. Stellantis said the procedure became "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 faraway 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 absolutely empty, and owners are advised to refrain from recharging. Stellantis says that a remedy is coming near near, and owners will likely be notified after they'll perhaps time table service.

Related: Dodge has a huge problem on its hands (and that's growing)

Inventory woes and plummeting sales stall Stellantis' progress

The recall news rubs more salt into Stellantis' wounds, giving car buyers yet any other reason now now to not patronize an automaker with existing inventory problems.

In keeping with an analysis by auto shopping web content online CarEdge, six out of the ten slowest-selling cars throughout the U.S. belong to Stellantis properties. Many of the worst-performing cars have a nearly two-year supply rotting away on dealer plenty across the u . s . a ..

In an announcement made early on Sept. 30, Stellantis said it "accelerated its planned normalization of inventory levels throughout the U.S.," prioritizing its target to have "not greater than 330,000 units of dealer inventory by year-end 2024" in place of 2025.

In the same fashion to reduced factory output, Stellantis says it plans to supply more incentives and discounts "on 2024 and older model-year vehicles."

Nonetheless it, Stellantis is doing whatever it be going to possibly to maneuver metal, as new numbers show that it truly is a ways struggling to accomplish that.

In new sales data released on October 1st, Stellantis reported that it sold 305,294 cars across its portfolio throughout the U.S. finally of Q3 2024 — a 19.8% drop from the same period last year and an eleven.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 throughout the quarter shows results, with dealer inventory reduced by 50,000 units, or eleven.6%.

“These cross-brand incentives, which will continue throughout 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 less than the ticker STLA on the New York Stock Exchange, is down zero.07% from the opening bell, trading at $thirteen.70 per share on the time of writing.

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