Chrysler parent company Stellantis has rescinded the terms and conditions it forced on its suppliers at the start of the year, responding to the blowback from companies opposed to the new contracts.
The automaker, whose North American base is in Auburn Hills, told suppliers in a letter Monday that it will revert to 2021 terms and conditions, retroactive to Jan. 1, according to a copy of the letter obtained by Crain's Detroit Business, an affiliate of Automotive News.
"Over the last few months, the North America Purchasing Team has worked closely with you to align on the 2022 Stellantis Global Terms and Conditions. Since Stellantis was formed there have been several initiatives across the corporation to converge the former FCA and PSA processes, methods, and ways of doing business," said the letter, signed by Martin Horneck, head of purchasing and supply chain for Stellantis NA.
"One of these processes was to create a Global Terms and Conditions for the global purchasing organization," the letter continued. "As we've worked through this process, and heard your feedback, we understand that each region has unique attributes related to the business in that region, and that those attributes cannot be ignored."
The reversal is a victory for suppliers, which have watched their top and bottom lines bleed amid supply chain volatility while automakers haul in profits. Stellantis recorded $43.7 billion in revenue for the first quarter of 2022, up 12 percent from the same time last year.
The move comes less than a week after Stellantis named Maxime Picat, the head of its Enlarged Europe region, as head of purchasing and supply chain. He replaced Michelle Wen, who has left the automaker.
Stellantis' step back on purchase order terms and conditions for 2022 that could have forced North American suppliers to reduce prices whenever they achieve any cost savings and remain locked into unfavorable contracts for as long the automaker wanted also suggests that although automakers historically have the upper hand, the supply base does have some leverage, especially when its back is against the wall, said Jonathan Jorissen, member at Brooks Wilkins Sharkey & Turco PLLC in Birmingham, which specializes in supply chain litigation.