Legacy automaker Stellantis (STLA) has a plan for North America, and it is a lot smaller than it ever used to be. Stellantis has a plan to slash its North American inventory by early 2025, and in a big way. The plan met with approval from investors, who sent shares up nearly 3% on Monday.
Stellantis is out to cut its North American inventories by 100,000 units before we get very far into 2025, as reports from Stellantis CFO Natalie Knight noted. Basically, Stellantis wants to get North America to “…a better, healthier position,” and apparently the way to do that is by having vastly fewer vehicles available for sale.
The plan makes some sense. Total inventories were up around 1.4 million units at the first half of this year, and with a reduced picture in North America, operating profit dropped about 40% as cars sat on lots unsold.
Bigger Problems Afoot?
Stellantis’ plan to pare inventories might be a good one, but there are some signs that it has other issues to work with. For instance, one report featured a police chief in Merrillville, Indiana, who noted that the Dodge Durangos his department had purchased were subject to “severe design flaws,” and had to be sold, ultimately at a loss. And with the United Auto Workers (UAW) potentially gearing up for more strikes, dealers are coming out in support of the UAW, against Stellantis.
Meanwhile, Stellantis’ plan to deal with this does not inspire much confidence: deployable tables in the front seat. A new patent application from Stellantis reveals that it is considering a fold-out table for the front seat, which seems to emerge from the center console. It is designed as a way to improve the experience of eating in your car, apparently, though just how useful that will be sales-wise is unclear.
Is Stellantis Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on STLA stock based on nine Buys, seven Holds and two Sells assigned in the past three months, as indicated by the graphic below. After a 14.28% loss in its share price over the past year, the average STLA price target of $22.17 per share implies 43.63% upside potential.
