Stellantis has officially admitted to a significant issue regarding their current stock levels. Specifically, the automaker is sitting on a massive amount of 2024 inventory that they simply cannot move. This news comes despite various attempts to clear the lots with rebates and incentives.
Unfortunately, the core problem remains the products themselves. Consumers and critics alike warned the company that these were vehicles nobody wanted. Yet, Stellantis proceeded regardless. Consequently, they now face an aging inventory crisis that looks like a serious problem for the brand.
The Reality of Unwanted Inventory
A recent report highlights that Stellantis has a glut of 2024 models stuck on dealer lots. In fact, this is not shocking news to industry observers. We have known about this building issue for some time.
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Primarily, the backlog consists of Dodge Hornets and similar vehicles. Interestingly, Stellantis is not even manufacturing some of these specific models anymore. They sold poorly from the start.
Furthermore, just like the Charger EV, they are simply not selling now. Previously, the automaker managed to move some units using insane lease deals. However, this short-term fix creates a long-term liability.
Eventually, the company will face a glut of EV inventory returning from these leases. At that point, they will likely be unable to sell them. The reality is that almost nobody wants these vehicles.
For example, there is very little demand for the Hornet. Similarly, the plug-in hybrid minivans are struggling to find buyers. As a result, Stellantis now has a massive problem on its hands.
The Threat of Lot Rot
The scale of this inventory issue is staggering. Estimates suggest there could be millions of units of inventory sitting around across the industry. This figure includes leftover new inventory from Stellantis as well as other manufacturers.
Dealers have never titled these vehicles. Instead, they are just sitting there. Currently, we are approaching 2026 in terms of model years. Therefore, these sitting 2024 models are severely outdated.
Stellantis actually manufactured most of these 2024 vehicles in 2023. Consequently, that represents nearly two and a half years of stagnation. This leads to “lot rot.”
The vehicles are literally deteriorating while sitting on the dealership lot. Tires develop flat spots, batteries die, and fluids age. Unfortunately, dealers are partly to blame here as well.
Some are refusing to drop prices enough to move the metal. On the other hand, even with incentives from Stellantis, customers are still walking away.
The Dodge Hornet Failure
Specific models highlight this failure more than others. For instance, the Dodge Hornet is a prime example. Despite improved incentives, nobody wants these cars.
Forums dedicated to the Hornet often try to defend the vehicle. Owners might claim the car is great initially. However, that sentiment often changes quickly.
Once the vehicle breaks and requires a tow, the reality sets in. Consequently, owners then realize the product is subpar.
Similarly, this pattern repeats with the Charger EV as well. Enthusiasts are rejecting these “bricks.” It is a frustrating situation for everyone involved.
Financial Implications and Future Outlook
Despite these challenges, there is still hope for the company. As an investor heavily invested in Stellantis, the potential for a turnaround exists. Currently, the brand seems to be correcting its course.
For instance, the Ram TRX remains a bright spot in terms of enthusiasm. Granted, many people complain about the price tag exceeding $100,000. However, those complaints will not change the market reality.
Manufacturers will never build a truck like the TRX for $40,000. That vehicle will simply never exist. Therefore, complaining about inflation or high sticker prices accomplishes nothing.
As long as enthusiasm exists, someone will buy the high-performance trucks. Moreover, there are positive rumors circulating regarding powertrains. Specifically, the Hemi engine might be making a comeback to the Charger soon.
Additionally, new products are in the pipeline. These changes suggest Stellantis will eventually be okay.
Clearing the Backlog
To fix the current crisis, drastic measures may be necessary. If profit margins look acceptable halfway through the first quarter, the company might act. They could issue insane rebates or kickbacks on these leftover 2024 vehicles.
The goal would be to simply blow them out of inventory. Consequently, this would look positive in terms of cash flow. It gets the metal moving again.
However, the company likely will not win on these specific vehicle sales. The profit margins will effectively vanish. Yet, clearing the lots is essential for future health.
Conclusion
Ultimately, this leftover inventory problem is visible everywhere. You can see it at Chrysler, Dodge, Jeep, and Ram lots. The 2024 models are piling up, and lot rot is setting in.
While the company has a plan for new products, they must first deal with the mistakes of the past two years. The market has spoken clearly regarding cars like the Hornet. Now, Stellantis must listen.
