Jeep halts production of Wrangler and Grand Cherokee due to slow sales, rising inventory: report – Ford Motor (NYSE:F), General Motors (NYSE:GM)

Jeep It has reportedly temporarily stopped producing its Wrangler and Grand Cherokee models due to high inventory levels.

What happened:Factories halted production of these best-selling models over the past week, reported The Wall Street Journal, citing people familiar with the matter, said the affected plants include two Detroit assembly plants and a factory in Toledo, Ohio.

In a statement, Stellantis STLAJeep parent company Škoda confirmed that “production adjustments” have taken place at the aforementioned facilities. However, it is unclear how long the production disruption will last.

The production cuts come at a time when Stellantis is facing one of the highest inventory levels in the industry, along with declining sales and dealer complaints. “Stellantis continues to take the necessary steps to improve operations in the U.S. market,” the company said, according to the report.

Dealers and analysts have attributed Stellantis' inventory problems to higher prices and fewer promotions compared to competitors. The company has struggled to reduce its vehicle stock in the U.S. market, leading to a 21% drop in sales during the first half of the year.

Under the leadership of the CEO Carlos TavaresStellantis has been focused on maintaining profit margins and controlling costs while investing in electric vehicles. The company has also considered cutting production and lowering prices to clear excess inventory, according to the report.

Stellantis did not immediately respond to Benzinga Request for comments.

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Why is it important?:Jeep's production halt is symbolic of broader problems in the U.S. manufacturing sector. According to a recent survey by the Institute for Supply Management (ISM), U.S. manufacturing activity has been contracting for five consecutive months, reflecting weak demand.

In addition, the automotive industry is dealing with fluctuating oil prices. Recently, Goldman Sachs revised its oil price forecasts, citing unexpectedly high US supply levels and downplaying disruptions in Libya.

The electric vehicle sector, once a hotbed of innovation, is also cooling off. Major automakers such as Ford Motor Co. F and General Motors Managing director have scaled back their electric vehicle ambitions due to declining demand.

In this challenging landscape, Stellantis is not alone. Volkswagen VWAG It is reportedly considering closing factories in Germany amid financial strains.

Price action:Stellantis shares listed in the United States closed at $16.08 on Wednesday, up 1.07% on the day. In after-hours trading, the stock fell 0.25%. Year-to-date, Stellantis shares have fallen 30.24%, according to Data from Benzinga Pro.

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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote