How Stellantis Destroyed Jeep
How Stellantis Destroyed Jeep
https://www.youtube.com/watch?v=Lb_mSTnnEaQ
In 2021, Jeep launched a new car. It’s a classic Jeep model —
[Ad] With the Jeep Wagoneer, you can do better.
[Narrator] reimagined for the 21st century. It was supposed to represent the future of this beloved brand. But the Wagoneer didn’t exactly live up to the hype.
Customer: It took about five hours for me to discover the first problem with it.
[Narrator] Jeeps are changing, and customers are starting to notice.
Customer: Worst decision of my life. Terrible purchase. Customer: This is why you never buy Wagoneer. Look at this huge water leak. Customer: Bruh! Don’t buy this shit. Customer: What Jeep in the world is worth $115,000? And they say that’s a sale.
[Karen, Stellantis Worker]: You can go in and look in the showroom and say, “Hey, this is a beautiful car.” But I know, like, hey, we probably sent out a lot of garbage because we refused to stop the line and fix certain things that needed to be addressed.
[Narrator] So how did Jeep go from making iconic American cars to ones with mechanical issues fresh off the lot? The answer is bigger than just one car, or even one brand. It’s about a multi-billion dollar company —
[News] The situation at Stellantis is, I think, the technical term, a mess.
[Narrator] and a business strategy that’s turned out well for shareholders at the expense of almost everyone else.
This is Matt, a longtime Jeep customer.
Matt: We like being in the Jeep family. We wanted to keep it that way. And the new 2022 Wagoneer came out.
[Narrator] Matt thought the Wagoneer would be an upgrade from his Jeep Grand Cherokee, but almost immediately, he found that wasn’t the case.
Matt: So we look at the older Grand Cherokee. This car is almost 12 years old, and it’s made of steel. It’s a steel stamped part. We move over to the newer Wagoneer here. It’s made of plastic. The whole thing.
[Narrator] Jeep has been building popular American cars since 1941, but in 2021, Jeep became part of a new global automaker.
[News]: Big announcement in the auto industry tonight. [News] The merger of FCA and Peugeot creates the world’s fourth-largest automaker. Stellantis.
[Matthew Hardigree, The Autopian] Stellantis is basically three semi-nonfunctioning national automakers combined into one. In North America, you have Chrysler, Dodge, Jeep. In Italy, you have Fiat. And then grafted onto that, we also have the French national automakers of Peugeot Citroën.
[Narrator] From the outside, the launch of the new Wagoneer looked like that of any other car. But it marked a critical turning point in how Jeep cars would now be made under Stellantis.
[Romaine McKinney], President, UAW Local 869: So I’ve worked at Chrysler Warren Stamping for 31 years. When Stellantis bought us, immediately I saw the difference. There was an immediate slash of funding. Money became the top priority.
[Matthew Hardigree] Carlos Tavares is an interesting character in the automotive world. He worked under a very charismatic, famous executive called Carlos Ghosn.
[Narrator] Carlos Ghosn made headlines in 2019 for escaping house arrest in Japan.
[News] Carlos Ghosn has fled house arrest. How exactly did he arrange to leave Japan?
[Narrator] But before all of that, Ghosn had a different reputation.
[Matthew Hardigree] Carlos Ghosn was famous for cost cutting.
[Narrator] Tavares worked as Ghosn’s second-in-command at the French car company Renault. As Ghosn’s protege, Tavares soon earned himself a reputation for being able to turn around struggling brands and deliver profits for shareholders.
[Matthew Hardigree]: Carlos Tavares has been clear from the beginning that his goal, in the larger Stellantis organization, is to make it efficient, and to make it function at almost any cost.
[Carlos Tavares] Cost reduction is not becoming a taboo anymore. We have been working hard on cost reduction for many years. We have not been so popular, but now everybody recognizes that the customers want affordability.
[Narrator] The first place Stellantis started pinching pennies was in manufacturing.
[Romaine] There were always what they called time studies.
[Karen, Stellantis Worker]: They look at it and they say, “Hey, well, one person could really just do this job.”
[Romaine] They figured that the less people doing the same job they could get, that was the more bang for their buck. We went down about 400 people on temporary layoffs. So we went from almost a thousand people in the building working, to less than 600.
[Narrator] In just its first three years as a company, Stellantis cut roughly 40,000 employees globally.
[News] Stellantis announced it will lay off more than 1,100 workers. Layoffs at Stellantis and thousands of jobs are on the line.
[Narrator] In the US, one of the most drastic cuts was the decision to idle a factory that had been around since the 60s.
[News] One of the state line’s largest employers announces it’s shutting down.
[News] Tuesday is the last day of production at the Stellantis Belvidere Assembly Plant. You know, people moved to Belvidere for this. This has always been the heart of Belvidere.
[Romaine] The community at Belvidere has lost millions of dollars in revenue. The barber shop, the McDonald’s, the car wash, the gas station that was 2,500 people or more, that went past those businesses every day.
[Narrator] Then there’s the workforce at Warren Truck, where the Wagoneer is made, which is almost half what it was in 2022.
[News] Stellantis saying they plan to lay off roughly 2,450 workers.
[Narrator] But for Stellantis, the cuts meant one thing.
[Matthew Hardigree] During the pandemic, the profit margins for Stellantis, even with everything happening in Europe and everywhere else, were huge.
[Narrator] In 2023, Stellantis made $18 billion in profit, and paid out nearly $7 billion to shareholders, 53% more than the year prior. Tavares took home almost $40 million, 479 times as much as the average employee.
[Matthew Hardigree] He himself got to take home basically, excluding Elon Musk, the biggest paycheck of any automotive CEO in the world. But then what happens next?
[Narrator] Workers wanted their share of the profits, too. Union workers at Ford, GM, and Stellantis went on strike in 2023 and won unprecedented gains, including a commitment from Stellantis to reopen Belvidere. For a moment, it looked like Stellantis would have to stop making cuts, and invest in the workers who made its profits instead. But that didn’t last long.
[Matthew Hardigree]: You know, the best way to think about it is like, Stellantis was like Wile E. Coyote, running off the cliff. And so long as Stellantis didn’t look down, they were fine.
[Narrator] Stellantis had not only cut expenses, they had also raised prices by a lot. By 2024, Jeep cars went from being priced below the industry average to $6,000 above it. And during the pandemic, when cars were in short supply, that worked.
[Romaine McKinney]: After Covid passed, and we were the highest-priced vehicles, you knew there had to be a problem in the very end. And we saw it.
[Narrator] After the pandemic, Stellantis kept prices high, which meant people weren’t buying their cars.
[Matthew Hardigree]: There was a thing called average selling days. And this is how you look at how quickly does a car get sold, and how many of them do you have? And you get at a number. And the Stellantis brands have all been so high that they’re either at the top of the graph, they have been, you know, on the lot for 140 days, 150 days to move all the cars, or with Ram, actually they had so many trucks, they were selling so slowly, they didn’t fit on the chart.
[Narrator] Once affordable cars had become out of reach for many Americans, and for the workers who built them.
[Consumer] It’s insane. I don’t know what Stellantis is smoking to think that this is going to sell in America. This is what people want from Jeep?
[Narrator] But this was by design. Stellantis executives wanted its cars, especially ones like the Wagoneer, to tap into high-margin luxury markets, rather than being mid-range cars like the Jeep models that had served Americans for decades.
[Matt] The 2014 Grand Cherokee had a sticker of $46,000. 2022 Wagoneer had a sticker of $80,000. This is almost doubling the price.
[Narrator] With prices this high, customers expected a quality car.
[Matt] Every 15,000 miles, these tires wear bald on the outside edge. It takes it like how long to get to that screen?
[Videographer] Ah, that’s frustrating. Yeah, it’s like, oh, man. There was like a mouse squeaking noise coming from right up by the windshield in the dashboard. And within a couple of days, I was noticing vibration in the steering at highway speeds. Just not problems that you would expect on any new car, let alone one that costs $80,000. That’s, like, not good. I would not buy another Stellantis product. I think they’ve gotten to a point where they’re marketing themselves as a premium option, and you can see that in the pricing, and maybe that would be okay if the product delivered on the promise.
[Karen] I don’t think we have a standard of quality anymore. First of all, they bring cheaper materials. Some of the times, our product does come out looking like it’s been on the road for seven years already. I just don’t know what the management style is right now. We’re not producing what we used to and how we used to produce,
[Narrator] The relentless cost cutting that let Stellantis grow its profits was starting to backfire.
[Matthew Hardigree]: And so I think it does make sense in a larger perspective to try to be efficient as a company. But if you’re efficient at the sake of producing cars that people want when you’re a car company, that isn’t going to work long term.
[Narrator] But rather than pull back on the cuts, Stellantis seems to be doubling down on this approach. So far, the company hasn’t followed through on any of the $18 billion in investments it committed to make in Belvidere, blaming “poor market conditions.”
[Narrator]: When we reached out to ask about this, Stellantis told More Perfect Union,
[Narrator]: “Stellantis has repeatedly said that it remains firmly committed to the US and will continue to abide by the 2023 UAW collective bargaining agreement.”
[Romaine] The promises about the Belvidere commitment have not come full circle at all. What the company is saying is that the climate is bad, sales are down, but we seem to be the only company like that. Isn’t that peculiar?
[Karen]: Looking at Ford and looking at General Motors, and they’re not experiencing the same hardships we are. It is evident that it is something that we are not doing right.
[Narrator] In fact, revenue is up for both GM and Ford. It’s only Stellantis that’s seen such a sharp decline. But despite the decline in revenue, the company still managed to pull off roughly $2 billion in stock buybacks this year, all while slashing jobs in almost every area of the company. It’s giving workers a sense that the worst is yet to come.
[Romaine McKinney]: Warren Truck laid off 1,200 people, up to 2,500 people coming up, to move a vehicle to Mexico. The vehicle wasn’t discontinued. The vehicle didn’t stop production. It just moved it. The same thing that looks like it’s going to happen at JNAP with the Durango. It makes no sense. And it is taking good jobs overseas to look for the lower production rate.
[Narrator] After months of rumors, Stellantis confirmed they’re expanding production in Mexico. The United Auto Workers are worried it’s a sign the company could be looking to move all production out of the U.S.
[Romaine McKinney]: What are we left to do? Who’s going to advocate for Stellantis, GM, or Ford to employ people in the United States? Because that’s what we need to work at, that’s where we need to make sure we have a strong foothold. This is not the Motor City because we make planes. We make cars here, and we want to continue to do that.
[Narrator] Trump campaigned on keeping auto manufacturing jobs in the US by raising tariffs on cars made abroad. Trump now says he plans to put a 25% tariff on all goods made in Mexico.
[Romaine McKinney]: The best thing the president-elect could do for me is to stand on those election promises, the same as I would like for Stellantis to stand on those contractual promises and obligations, and to make sure the United States of America has a middle class, a UAW, a strong UAW front, and we all work.
[Narrator] In a surprising move, Carlos Tavares stepped down as CEO in early December. Stellantis cited “different views” as the reason for his departure. It could mean that executives are beginning to doubt the vision Tavares had for the company, and are looking to take things in a new direction.
[Matthew Hardigree]: They only have a very narrow window of time with which to get North America back to where it’s supposed to be, and where it should be, and where it has somewhat historically been. But it requires a lot of hard choices. And those choices are not necessarily cutting. It’s more investing.
[Narrator] Choosing to invest rather than cut would be a radical shift in Stellantis’ business strategy. But it could be the key to getting the company back on track.
[Matthew Hardigree] I think a really good example of this is Ford. What they did is they’ve invested a lot of time and money in a third generation vehicle and an affordable electric car. And it means some hard choices in the short term, and a lot of investment now, for an uncertain outcome in a couple of years. But if it pays off, it’s going to pay off huge for the company.
[Matt] I believe in supporting American jobs and buying American vehicles. I think it’s important that we keep auto manufacturing in this country. That was definitely a factor. I wouldn’t have been as interested if it had been made in Mexico or elsewhere.
[Romaine] My ask, or my demand, was to be, firstly, to keep the promise. The contractual obligations will significantly benefit everyone. Invest in us. You’ll be glad you did it.