Stellantis (STLA), the parent company of Jeep, recently announced that it will resume production at select U.S. assembly plants following “production adjustments.” Additionally, the company stated it will evaluate if more such adjustments are necessary in the future. This news comes after a report by The Wall Street Journal revealed that Stellantis had paused production of its Jeep Wrangler and Grand Cherokee SUVs in the past week. Notably, these models are among Jeep’s bestsellers.
Furthermore, in a statement to Reuters, Stellantis confirmed that it is taking steps to improve its U.S. operations by adjusting production at its Toledo North, Jefferson, and Mack plants. Production at these facilities is set to resume on Thursday.
Why Is STLA Making “Production Adjustments”?
For months, Stellantis has faced criticism from Wall Street analysts over its excessive vehicle inventory, which has been attributed to higher prices and fewer promotions compared to its competitors. Moreover, some retailers have expressed frustration over being left with an abundance of expensive or outdated models, making it difficult to attract customers.
As a result, Stellantis has struggled to reduce its stock of vehicles in the U.S., leading to a decline in both sales and market share.
To illustrate the extent of this issue, according to the TipRanks “Bulls Say, Bears Say,” analysts bearish on STLA stock have flagged the high dealer inventory that has “risen to approximately 100 days in the U.S., potentially suggesting some need for discounting [the vehicles] and de-stocking.”
Is STLA a Good Stock to Buy?
Analysts remain cautiously optimistic about STLA stock, with a Moderate Buy consensus rating based on 13 Buys, three Holds, and two Sells. Year-to-date, STLA has declined by more than 25%, and the average STLA price target of $27.26 implies an upside potential of 71.5% from current levels.
