Stellantis Implements Recall of Nearly 200,000 Plug-In Hybrids Due to Fire Hazard

Automaker Stellantis has announced a significant recall involving close to 200,000 plug-in hybrid vehicles due to concerns over a potential fire risk. This decision comes shortly after the company issued a surprising profit warning.

The recall primarily affects 194,000 Jeep-branded vehicles, predominantly located in North America, where there have been reports of fires occurring in parked cars with the ignition switched off.

The specific models included in the recall are the Jeep Wrangler and Jeep Grand Cherokee plug-in hybrids. Owners of these vehicles have been advised to park them outdoors, away from residential areas, and to avoid charging until a resolution is provided.

An internal review of customer information uncovered a total of 13 reported fires and two injuries associated with these vehicles. Stellantis estimates that approximately 5 percent of the affected models might be at risk. Notably, Jeep commands a small share of the UK automotive market, holding just 0.3 percent, and it remains unclear if any UK customers are impacted by this recall.

This latest recall is yet another challenge for Stellantis, which has faced difficulties in the U.S. market. The company attributes this week’s profit warning to issues like declining sales and backlog problems, forecasting a potential cash burn of up to €10 billion in the current financial year, alongside a significant decrease in profit margins. Consequently, Stellantis has initiated production cutbacks in the U.S.

Moreover, the ongoing downturn in the electric vehicle (EV) sector has compelled Stellantis to extend the suspension of production for electric Fiat 500 models for an additional three weeks, now set to resume on November 1, due to insufficient orders. The company has communicated to labor unions that the EV market in Europe is currently facing serious challenges.

Following the profit warning on Monday, Stellantis’s shares experienced a nearly 15 percent drop, although they showed signs of recovery during early trading on Tuesday.

A research note from financial services firm Jefferies indicated that Stellantis may need to reevaluate its business strategy. The note emphasized the necessity for the management team to effectively manage scale and brand portfolios to regain market share.