Last week, Stellantis announced a dramatic 70% drop in profits for the year 2024. The automotive group’s earnings plummeted to 5.5 billion euros, accompanied by a 17% contraction in revenue. This collapse was mainly attributed to declining demand in the US market, where high vehicle prices drove away many potential buyers.
Stellantis’ car price cuts in the USA appear to be having initial effects
To counter this critical situation, Stellantis initiated a profound strategic review last year, opting for significant price reductions across its entire range marketed in the United States. The objective was twofold: to win back customers and reduce excess inventory accumulated in dealership lots. According to analysis conducted by CoPilot, a platform specializing in studying the automotive market through artificial intelligence, this strategy is beginning to produce the first tangible effects.
Data collected by CoPilot, which constantly monitors prices and inventory at American dealerships, reveals that the average price of a Ram vehicle has fallen by 9% in the last year, settling at $60,352. Even more significant is the data on market days supply (MDS), a parameter measuring the average time unsold vehicles remain at dealerships, which decreased by 23% to reach 106 days.
For the Jeep brand, the price reduction was even more pronounced, with a 12% drop bringing the average price to $47,691. At the same time, there is an 18% reduction in inventory time (MDS), now at 111 days. Chrysler models have also benefited from this strategy, with a 5% price reduction setting the average at $44,932, accompanied by a drastic 47% reduction in lot times, now down to just 94 days.
These indicators suggest that Stellantis‘ new pricing policy is effectively helping to reduce inventory overload. In January alone, the group reported reducing the number of vehicles in stock in the United States by 100,000 units. This change of direction marks a clear departure from the previous strategy implemented under former CEO Carlos Tavares, who had aimed for premium positioning with higher prices. That approach had ended up discouraging customers, leading to a decline in sales and consequently an increase in inventory.
Although current price cuts are proving effective in moving vehicles from dealership lots, doubts persist about the sustainability of this strategy in the long term. As Stellantis continues its efforts to stabilize operations in the US market, finding the right balance between price competitiveness and profit margins remains a crucial challenge for the group’s future.