Jeep reportedly has temporarily stopped producing its Wrangler and Grand Cherokee models due to high inventory levels.
What Happened: Factories paused production of these top-selling models over the past week, reported The Wall Street Journal, citing people familiar with the matter. The affected plants include two Detroit assembly plants and a factory in Toledo, Ohio.
In a statement, Stellantis STLA, Jeep's parent company, confirmed “production adjustments” at the mentioned facilities. However, the duration of the production halt remains unclear.
The production cuts come as Stellantis faces some of the highest inventory levels in the industry, coupled with declining sales and dealer complaints. “Stellantis continues to take the necessary actions to improve operations in the U.S. market,” the company stated, according to the report.
Dealers and analysts have attributed Stellantis’s inventory issues to higher prices and fewer promotions compared to competitors. The company has struggled to reduce its stock of vehicles in the U.S. market, leading to a 21% drop in sales during the first half of the year.
Under the leadership of CEO Carlos Tavares, Stellantis has focused on maintaining profit margins and controlling costs while investing in electric vehicles. The company has also considered trimming production and reducing prices to clear excess inventory, according to the report.
Stellantis did not immediately respond to Benzinga’s request for comment.
Why It Matters: The halt in Jeep’s production is emblematic of broader issues in the U.S. manufacturing sector. According to a recent survey from the Institute for Supply Management (ISM), U.S. manufacturing activity has been contracting for five consecutive months, reflecting weak demand.
Additionally, the automotive industry is grappling with fluctuating oil prices. Recently, Goldman Sachs revised its oil price forecasts, citing unexpected U.S. supply levels and downplaying disruptions in Libya.
The electric vehicle sector, once a hotbed of innovation, is also cooling off. Major automakers like Ford Motor Co. F and General Motors GM have scaled back their EV ambitions due to waning demand.
In this challenging landscape, Stellantis is not alone. Volkswagen VWAGY is reportedly considering closing factories in Germany amid financial strains.
Price Action: Stellantis’ U.S. listed stock closed at $16.08 on Wednesday, up 1.07% for the day. In after-hours trading, the stock dipped 0.25%. Year to date, Stellantis’ stock has fallen 30.24%, according to data from Benzinga Pro.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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