15 July 2024
Stellantis NV has filed another lawsuit against a parts supplier over a pricing dispute, this time targeting the manufacturer of fuel tanks for the Chrysler Pacifica minivan.
The automaker sued Quebec-based Spectra Premium Mobility Solutions Ltd. earlier this month after the supplier threatened to stop shipping fuel tanks for the plug-in hybrid minivan, which would shut down production at Windsor Assembly Plant, according to the lawsuit filed in Oakland County Circuit Court.
Stellantis said its supplier demanded a 12.5% price increase retroactive to Jan. 1 or it would withhold parts. The automaker was set to run out of fuel tanks late last week, which would bring the line to a halt. An Oakland County judge denied the automaker’s request for a temporary restraining order that would have forced the supplier to keep shipping parts at contract price.
It is unclear to what extent, if any, production has been impacted at the plant, which produces 350 minivans per week and is aiming to scale up to 750 per week in the second half of the year, per the lawsuit.
Stellantis declined to comment.
The automaker has warned of devastating consequences, including sweeping layoffs and large financial damages, resulting from production shutdowns related to supplier disputes. However, the automaker has averted long-term production disruptions by either winning injunctive relief from the court or paying suppliers under protest.
The lawsuit against Spectra marks the fourth known legal fight Stellantis has initiated against its suppliers this year. Pricing disputes are common in the automotive industry, but it is rare for a customer to sue its supplier. Long-simmering tensions between Stellantis and parts makers have come to a head in recent months amid the automaker’s relentless cost-cutting pursuit and unapologetic targeting of its supply base to drive down costs.
Domestic rivals Ford Motor Co. and General Motors Co. are in the same fight to retain market share and electrify their portfolios as Tesla Inc. and foreign automakers pose greater threats.
As in previously filed lawsuits, Stellantis argued that a production shutdown would have dire consequences not only on the automaker, but the supply chain dependent on the Pacifica.
“The economic consequences of a cascading automotive industry disruption of this magnitude is massive and immeasurable,” the lawsuit said.
But Judge Victoria Valentine denied the restraining order against Spectra, departing from her previous rulings on the other two supplier lawsuits that have crossed her docket. In the case against Yanfeng, which involved millions of dollars allegedly lost in a cyberattack, Valentine granted injunctive relief to Stellantis. Same went for Kamax when Valentine’s order forced it to keep parts flowing to the automaker.
In the Spectra order entered July 5, Valentine did not provide a reason for denying the request this time.
The decision is a blow for Stellantis as the automaker turns to the court to protect it from supplier demands for better pricing. The company has argued that its suppliers are bound by contract terms even if the economics have become unfavorable. Lawyers representing the suppliers have argued that the supply agreements are not enforceable requirement contracts.
In a case against MacLean-Fogg, Oakland County Judge Michael Warren also denied a preliminary injunction against the supplier. To keep production going, Stellantis is paying the company under protest while the case works its way through the court. After the judge indicated that Stellantis was likely to win the case on merits, however, MacLean-Fogg’s attorneys moved the case to federal court.
Patrick Green, attorney at Dickinson Wright representing Stellantis, did not return a request for comment on the most recent lawsuit. Matthew Letzmann, attorney at Brooks, Wilkins, Sharkey & Turco PLLC representing Spectra, declined to comment.
Stellantis said in the lawsuit that in 2022 it agreed to pay 100% of Spectra’s raw material costs per agreed index and that the supplier refused to provide the automaker its cost walk data justifying a price increase, which it said would more than double the supplier’s profit margin.
“Defendant has admitted to FCA that it has already manufactured approximately 400 fuel tanks that are finished and ready to be delivered to FCA — but it simply won’t ship them in order to try to extract massive price increases out of FCA,” the lawsuit said.