Can Stellantis Recover From Gutting Itself? – CleanTechnica

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A recent video from More Perfect Union covers some of the woes Stellantis is experiencing, particularly with the Jeep brand. Not only are people having problems with the vehicles, but the brand has largely priced itself out of the market. First, let’s check out the video and then I’ll summarize it and discuss what we can learn from it.

Before I discuss the video, it’s important to keep in mind that this does represent a biased view of what’s wrong at Stellantis and Jeep. More Perfect Union is a non-profit media organization that skews to the left on most topics. Whether you like that slant or not, it’s always important to keep in mind. Problems experienced by buyers and workers are the main focus of the video, and delivering value to shareholders is the villain of the video’s story.

That having been said, the video does make some great points about the problems the company is going through, and ultimately they affect shareholders in the long run, so people who lean right do need to keep this in mind, too.

The video starts by introducing the new Wagoneer Jeep introduced in late 2021. Unlike the Jeeps from decades ago, the model is an expensive luxury SUV. Rugged off-road performance has been cast aside for a cushy interior, doors that don’t readily come off, and things like large touchscreens. Most importantly, the vehicle costs over $80,000, with some variants exceeding $100,000. And the owner they interviewed has been having all sorts of problems with his copy, including uneven tire wear, slow software, plastic everywhere instead of metal, steering vibrations, and more.

He’s far from the only one experiencing problems with Jeeps these days. Clips from YouTube videos show people experiencing water leaks, saying buying one was the worst decision of their life, saying “Don’t buy this sh*t!”, and complaining about the price of the vehicle for what it is. One of the line workers said that the Wagoneer assembly process wouldn’t stop when there were problems, and that they probably sent a lot of problem cars out the door.

As a quick aside, search Jeep forums and talk to Jeep 4xe owners. Clearly, the company’s emerging PHEVs and EVs are having similar problems.

The video asserts that the problem started with the founding of Stellantis. When Fiat, Chrysler, and Peugeot (plus all of the sub-brands) got put under the same roof, strict cost-cutting measures went into place and the approach to building Jeep vehicles changed to achieve the goal of cost cutting. A former protégé of Carlos “Le Cost Killer” Ghosn at Renault, Carlos Tavares followed the same approach.

Staff were cut after time studies showed that they could wring the same productivity out of fewer people. A whole factory was closed, crushing Belvidere, Illinois. While vehicle quality dropped as less attention got paid to each one, prices went up and were able to stay up in the post-pandemic environment. This took the company back into profitability, allowed dividends, and brought Tavares a huge paycheck.

Now, things are tougher. Competitors dropped prices to respond to a return to normal economic conditions, but Stellantis kept the prices high, hoping to live in the luxury market instead of having to dig deep. Between that and a declining vehicle quality reputation, sales are way down and Stellantis vehicles are stacking up on US dealer lots. The company has also been accused of not keeping up on commitments made to UAW that ended the 2023 strike, citing market conditions.

Other domestic manufacturers are doing a lot better, and despite the problems they’re having, Stellantis is still doing stock buybacks while cost cutting measures continue to cripple the company. To fix the situation, the company planned to move more production to Mexico, but has since run into the problem of looming tariffs Trump intends to put on vehicles produced there.

Recently, Tavares stepped down as Stellantis CEO, and the company’s future is unclear. The video suggests moving from cost cutting to more investment to get better outcomes the way Ford did.

Some Thoughts On This

It’s easy to get sucked into politics with stories like this. It’s unions versus management, profits vs socialism, domestic vs foreign production, shareholders vs customers — and each political party claims to have all of the answers to these sorts of tensions. But this is a mistake, because what Stellantis really needs is balance, not to tip things hard in one direction or hard in the other.

Obviously, automakers have to turn a profit at least most of the time to exist. It would be foolish to assume that we could just nationalize them, turn them into non-profits, or turn them into communes. If anything, those sorts of strategies would tip the situation hard in the opposite direction, leading to endless losses and ultimately betraying the customer to protect whatever entity or collective owns it.

On the other hand, an overly intense focus on delivering short-term value to shareholders has cannibalized the company. Unhappy customers who essentially got ripped off, workers who can’t work effectively and deliver a quality product, dealers who have unsellable inventory stacking up — all of this adds up to the shareholders going down the toilet along with everyone else. This isn’t good capitalism, either.

This intensive cost cutting approach hasn’t worked out for Carlos Ghosn’s old company, either. Quality problems at Nissan for both EVs (I had to spend a couple hours with a wrench tightening things when I bought a LEAF in 2018) and ICE vehicles (especially transmissions) led to a decline in buyer confidence. Recently, the company cut thousands of jobs, reducing global manufacturing by 20%.

Ultimately, we’re probably having a crisis at the very heart of how corporations are run these days. Instead of thinking of both today and tomorrow, it appears that CEOs that would basically loot companies and hand shareholders (and themselves) cash became popular. Nobody wanted to think about tomorrow because they’d probably sell the stock to some other sucker before things got really bad, but still have those dividends and profits from the sale in their pockets.

The obsession with quarterly numbers is another factor. There’s intense pressure to make sure that companies deliver in the short term without much thought given to how they’ll be doing in even 5 years. That way of thinking, by design, has no future.

Featured image: a screenshot from a Jeep video showing a future electric Wrangler driving underwater. (Fair use, commentary.)