Automaker Stellantis (NYSE:STLA) is offering voluntary early retirement to roughly 6,400 white-collar employees to control costs. The Jeep maker is anticipating escalated expenses for its unionized workers going forward with the tentative labor contract with the UAW (United Auto Workers) union. Moreover, the unfavorable macro environment coupled with the company’s efforts to transition to electric vehicles (EVs) is costing it billions of dollars.
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On Monday, COO Mark Stewart said that roughly half of its nonunion U.S. workers will be offered buyouts. Employees with at least five years of experience will be eligible for voluntary separation packages. These employees would likely leave the company before year-end. Workers with five to nine years of employment would get three months of base pay, while those with ten to 14 years would get six months of base pay. Further, workers with 15 to 19 years of experience would get nine months of base pay, and those with 20 or more years of experience would get a full year’s base pay.
Additionally, once the new labor contract with the UAW is ratified, Stellantis plans to offer unionized workers voluntary buyouts. For unionized workers, the agreement says that Stellantis will “offer $50,000 pre-tax for an unlimited number of eligible production and skilled-trade members in 2024 and again in 2026.” The latest cost-cutting initiative is the second one this year after Stellantis offered buyouts to 33,500 U.S. employees in April.
Is Stellantis a Buy Now?
With 15 Buys and one Hold rating, Stellantis stock commands a Strong Buy consensus rating on TipRanks. Also, the average Stellantis price target of $25.54 implies 29.8% upside potential from current levels. Year-to-date, STLA stock has gained 47.1%.
