The North America purchasing chief of Stellantis said Feb. 27 at an industry town hall that the automaker will consider supplier requests for pricing relief, according to two people in attendance, marking a reversal of a "no more claims" policy announced at the same event a year ago.
Marlo Vitous told supplier executives and business leaders at the event in Michigan that communicating a hard-line policy on contracts was necessary in 2024 as the automaker was overwhelmed with some $6 billion in supplier claims amid deep operational woes in North America, the people in attendance said. Stellantis — the owner of the Chrisler, Jeep and Ram brands — had still granted some price increases despite the policy.
Vitous said those looking for pricing relief must come with documentation and be willing to enter a three-year cost savings plan with the automaker, according to the attendees.
Vitous made her remarks during the annual MEMA Original Equipment Suppliers town hall, which brings together hundreds of industry insiders and is closed to the media.
The purchasing chief's address to the supplier community came just days before what could be a major stress test for automaker-supplier relations. On March 4 President Donald Trump's administration imposed 25 percent tariffs on Canada and Mexico, as well as double the 10 percent tariff on China, in a move that would rock the supply chain.
Vitous told suppliers that Stellantis has a plan to handle tariffs in the short and long term should they be implemented, the attendees told Crain's Detroit Business.
Vitous was joined by Tim Fallon, senior vice president of North America manufacturing; Shane Karr, senior vice president of public affairs; and Jeep CEO Bob Broderdorf.
Stellantis declined to comment on Vitous' remarks.
Several of the executives said communication with Stellantis has improved considerably in recent weeks and they were optimistic about better relations. Others said they remained skeptical that the company — whose nerve center shifted to Europe after the FCA-Peugeot merger in 2021 — would "walk the walk."
Those in attendance at the town hall said it was clear Stellantis used the event to demonstrate its commitment to improving supplier relations.
Vitous also emphasized the company's focus on regional decision making, attendees said. The perceived obsolescence of the automaker's North America headquarters in Auburn Hills, Mich. — and lack of decision-making power of executives based there — has been a major sore spot for suppliers and Michigan officials.
The complex that Chrysler has called home since 1996 might have life yet. Per a memo sent in January, Stellantis employees are required to be in the office three to five days per week beginning March 3.
Broderdorf, who is part of a major shake-up of top leadership at the automaker, spoke about restoring the Jeep brand by slashing prices to clear inventory and investing more than $3.2 billion into new products, the attendees said. The theme was that Jeep will cater to diehards while broadening reach with more vehicles at competitive prices.
That's music to suppliers' ears. Many have been stung by depressed volumes in North America over the past year. New models offer the opportunity to reset supply contracts, but more importantly, should help the automaker's production and sales volume — the lifeblood of parts makers.