Stellantis N.V. STLA recently filed nine federal lawsuits against the United Auto Workers (UAW) and two dozen union locals to stop the union from initiating a mid-contract strike over delays in reopening an assembly plant in Illinois. The first lawsuit, filed on Oct. 4, 2024, accuses the UAW of lodging false grievances to justify mid-contract strikes that would breach the no-strike clause of their collective bargaining agreement.

The lawsuit, filed in the U.S. District Court for the Central District of California, claims that the union ignored the terms of Letter 311, which allows Stellantis to adjust future investment plans based on factors like consumer demand, market conditions and plant performance. Per an internal email from Stellantis, the transition to electrification is proceeding more slowly than expected. STLA and its competitors are facing delays and even cancellations of investment and product launches due to slower-than-anticipated adoption of electric vehicles. Stellantis warned that it would hold the national and local union branches accountable for any revenue losses and damages caused by illegal strikes.

Per Shawn Fain, UAW president, the union has the right to strike under the 2023 agreement. Some UAW locals are preparing to vote on strike authorization in response to allegations that Stellantis is planning to move Dodge Durango production overseas and delaying the reopening of the Belvidere Assembly Plantin in Illinois. Hundreds of UAW members gathered in Sterling Heights to demand that Stellantis keep Durango production in Detroit and reopen the Illinois plant.

Per Stellantis, market conditions are responsible for the delays at Belvidere. It proposed several future investments, including a Mopar Mega Hub in 2025, stamping operations and a midsize truck allocation in 2027. The future Durango investment in 2026 at Stellantis Detroit Assembly Complex is subject to approval due to the unpredictable nature of the vehicle market.

Following its initial lawsuit, Stellantis filed eight additional lawsuits against the UAW and 23 local branches. The company also rejected a union proposal to revive the Jobs Bank concept, a program that contributed to Stellantis' 2009 bankruptcy and could threaten its future stability.

STLA’s Zacks Rank & Key Picks

Stellantis currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the auto space are Modine Manufacturing Company MOD, Blue Bird Corporation BLBD and Suzuki Motor Corporation SZKMY, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for MOD’s fiscal 2025 sales and earnings suggests year-over-year growth of 8.44% and 18.77%, respectively. Earnings per share (EPS) estimates for fiscal 2025 and 2026 have improved by a penny and 8 cents, respectively, in the past 30 days.

The Zacks Consensus Estimate for BLBD’s 2024 sales and earnings suggests year-over-year growth of 17.58% and 215.89%, respectively. EPS estimates for 2024 and 2025 have improved by 65 cents and 80 cents, respectively, in the past 60 days.

The Zacks Consensus Estimate for SZKMY’s fiscal 2025 sales and earnings suggests year-over-year growth of 7.36% and 22.51%, respectively. EPS estimates for fiscal 2025 and 2026 have improved by 78 cents and 99 cents, respectively, in the past 60 days.

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