Stellantis employees told of spending cuts as ‘doghouse’ policy

Stellantis CFO Natalie Knight calls on employees to implement drastic cost-cutting measures to reduce the company’s cash drain

Strantis reintroduced a policy of austerity known internally as the “dog house.” The goal is to get employees to help reduce the company’s cash drain during a difficult period for the automaker, which reported a sharp 20% drop in U.S. sales in the third quarter compared with the same period last year despite the incentives. Year-to-date, sales are down 17%, underscoring the challenging environment the company faces.

Chief Financial Officer (CFO) Natalie Knight broke the news to Stellantis employees in an internal email last week. The policy is framed by “imposing stricter attention and control on procurement requisitions” and aims to cut external spending as much as possible.

More: UAW votes for Stellantis strike, says it’s time to ‘Sh!tcan Carlos’

according to wall street journalOn the website, which obtained the internal documents, Knight urged employees to “exercise more discipline” on spending to ensure “significant savings for the company.” It’s important to note that this tight spending policy will not affect existing purchase orders or invoices, only new ones.

Interestingly, Knight also noted that the term “dog house” has been used in the past, but she did not provide specific details. In her email, she urged staff to reject any request for spending that was not deemed absolutely necessary and called for “draconian measures” to ensure “optimal financial performance in 2024, 2025 and beyond.”

Electric vehicle transformation challenges

The email also mentioned the term “Darwinian Era,” originally coined by Stellantis CEO Carlos Tavares to describe the chaotic shift toward electric vehicles that has plunged the entire auto industry into confusion.

Despite earlier forecasting positive cash flow, Stellantis now expects to burn $6-11 billion in cash in 2024. Still, the automaker’s investor relations chief recently assured stakeholders that they will still have a “healthy amount of cash” by this year. The end.

The recent financial pressure has been attributed to shrinking profits and the costly process of trimming North American inventory. Worse, potential strikes at U.S. factories are looming, threatening to further tighten the financial noose.

Legal battle with UAW

Stellantis has filed additional lawsuits against the United Auto Workers (UAW) and several local chapters in an ongoing conflict with the union. The company claims the UAW violated its contract by threatening to strike over delays in planned investments. Stellantis argued that last year’s agreement gave them some flexibility to adjust their investment strategy based on market conditions, an explanation the UAW strongly disagrees with.

Natalie Knight, Chief Financial Officer, Stellantis.