Stellantis NV is offering buyout packages to 6,400 white-collar workers in the United States, citing market conditions and the transition to electric vehicles for the decision.
The offer was made available to about half of its 12,700 salaried employees not represented by the United Auto Workers. It’s the second round of buyouts the company has announced this year.
The industry is facing high interest rates that are challenging the ability of many customers to purchase new vehicles, contributing to a 1% decrease in Stellantis’ U.S. sales in the first nine months of 2023. Meanwhile, Stellantis is just about ready to start the launches of its first North American all-electric offerings, which its CEO has characterized as 40% more expensive than internal combustion engine counterparts. They’ll come just as the industry is pulling back on its EV projections because of affordability challenges and lagging charging infrastructure.
“As the U.S. automotive industry continues to face challenging market conditions, Stellantis is taking the necessary structural actions to protect our operations and the Company,” according to a statement sent Monday by spokesperson Jodi Tinson. “As we prepare for the transition to electric vehicles, Stellantis announced today that it will offer a voluntary separation package to assist those non-represented employees who would like to separate or retire from the Company to pursue other interests with a favorable package of benefits.”
The offer includes a lump sum for employees with at least five years of experience. Those with five to nine years are eligible for three months of pay, 10 to 14 years is six months, 15 to 19 years is nine months and 20 years or more is a year of pay.
In April, Stellantis offered 2,500 U.S. salaried employees buyouts as well as 31,000 hourly workers in the United States and Canada.
It’s not unusual for the automaker to offer buyouts to salaried workers in the fall. It did so in 2022 and 2021, as well. But the offers come as competitors are delaying EV launches, reducing their production volumes and scrapping electric-related programs. Meanwhile, high interest rates have created affordability challenges, though Stellantis recently shared it has a three-month order book.
“Stellantis has talked previously about cutting various costs in order to fund their investments in EVs and electrification going forward,” said Sam Abuelsamid, principal e-mobility analyst at market research firm Guidehouse Inc. “They’re probably focusing on people working in areas related to internal combustion engine vehicles where there’s less future investment in those products.”
Stellantis’ largest brands, Jeep and Ram, are down 9% and 2%, respectively, through the end of September.
“It’s not surprising,” Abuelsamid said, “that they’re looking to cut some costs as they get the sales up on those high-margin vehicles.”
Plus, there are 43,000 UAW members employed at Stellantis who are currently assessing whether to ratify a tentative agreement negotiated by the union. In addition to 27% wage increases, cost-of-living adjustments, $19 billion in investments and increased pension contributions, that deal offers $50,000 retirement incentive packages next year and in 2026 for legacy production and skilled trades workers.
Stellantis executives have characterized the deal along the same lines as Ford Motor Co. The Blue Oval expects the agreement will add on average $850 to $900 in cost per vehicle. Both automakers have suggested that means they will need to improve manufacturing efficiency to cover that.
“Assuming it gets ratified,” Abuelsamid said, “they need to get some savings somewhere else to offset that.”
The company also cited the union’s 44-day targeted strike, which cost it less than $800 million in net income, as the reason it pulled out of trade events like the Los Angeles Auto Show, Las Vegas’ CES consumer electronics show and the Specialty Equipment Market Association’s show, also in Vegas.
“The market and the threats on the market are providing a lot of caution, especially when you are an executive in a car company,” said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions LLC. “Car companies don’t deal really well with changes in interest rates and other uncertainty. The transition to EVs is a big one and nothing like what the industry has dealt with in the past. Missteps are expected in this movement.”
The EV pullback and increased labor costs also may allow the company a reason for the buyouts without also blaming the 2021 transatlantic merger between Fiat Chrysler Automobiles NV and French rival Groupe PSA that created Stellantis, Fiorani added.
Following a similar tentative agreement at General Motors Co., that Detroit automaker announced a 3.5% wage increase for salaried workers and that it was increasing its 401(k) contribution for them by 2 percentage points.
Stellantis rolled out salary increases effective July 1 for nearly all non-represented salary employees in the United States as a part of regular salary reviews to benchmark competition. It added new program benefits around family and mental wellness, too.
GM in April had said about 5,000 employees accepted a buyout offer, resulting in the automaker taking a $1 billion charge in the first quarter. Ford offered buyouts last year to eliminate 2,000 salaried jobs and 1,000 contract jobs.
Stellantis is launching its first EV in North America — the Ram ProMaster commercial van — in Mexico before the end of the year. It also has said it’s launching next year the all-electric Jeep Recon and Wagoneer “S” SUVs, Dodge Charger muscle car and Ram 1500 REV pickup truck alongside the gas generator-powered Ramcharger. It brings the Fiat 500e from Italy, too.
“As we head into 2024, we remain committed to executing our Dare Forward 2030 strategy, which includes the launch of eight new electric vehicles,” Stellantis’ statement said.
Those future launches and a strong EV background in Europe set up the automaker for success in the transition in North America, Fiorani said.
“They haven’t invested tons of money in North America yet, so they’re not sitting on hundreds of units of excess capacity waiting for the EV market to show up,” he said. “Their initial focus has been on plug-in hybrids, which they’ve done well in, and EV trucks, which will do well eventually. They are positioned very well, but if they have too many people on staff, then they are getting ahead of the curve there.”
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