What's Happening?
Stellantis, the parent company of Chrysler, has announced a recall of 91,787 Jeep Grand Cherokee plug-in hybrid SUVs in the United States. The recall affects models from 2022 to 2026 due to a software error in the battery pack control module, which can lead to a sudden loss of drive power and increase the risk of a crash. The U.S. National Highway Traffic Safety Administration has confirmed the issue, and owners will be notified by mail with notices expected to be sent by October 23. Stellantis shares have seen a slight drop of 0.71%, currently priced at $9.08.
Why It's Important?
The recall is projected to cost Stellantis between $30 million and $50 million, adding to nearly $951 million in recall costs since 2023. This financial impact, while not large by industry standards, contributes to the negative sentiment surrounding Stellantis' stock, which has fallen over 40% in the past year. The company's 6.36% dividend yield continues to attract income investors, but frequent recalls and quality control issues pose challenges to long-term investor confidence. Analysts are divided, with some seeing value in the dividend payout, while others express concern over financial pressures.
What's Next?
Owners of the affected vehicles are advised to monitor recall updates through customer service or the NHTSA website. Analysts maintain a Hold consensus rating for Stellantis stock, with mixed opinions on its future performance. The average stock price target is $10.60, suggesting a potential upside of 16.74% from the current price. The recall highlights ongoing risks related to safety fixes and potential fluctuations in Stellantis' share price.
