Foley & Lardner LLP Partners Nicholas Ellis and Vanessa Miller are quoted in the article, "Stellantis Imposes Changes That Could Raise Suppliers' Costs, Cause 'a Lot of Friction'," which published in Crain's Detroit Business and Automotive News and covers the key changes Stellantis made to its purchase order terms and conditions that are addressed in this blog post.
The changes went into effective on January 1, 2022, and may have a significant impact on suppliers and their business with Stellantis. For instance, the changes can force North American suppliers to reduce prices whenever they achieve any cost savings and remain locked into unfavorable contracts for as long as the automaker wants. Miller said that many suppliers are "concerned about how this is going to play out, and just want more clarity into what the practical implications are of these changes."
Suppliers are now also expected to absorb unexpected costs while giving Stellantis the benefit of any savings they find. Ellis said, "That's the source of a lot of friction in the supply chain these days." And with added provisions that expand the ability to prolong the life of a contract, Stellantis now can unilaterally extend North American purchase orders across multiple vehicle programs and extend vehicle programs more than once – another area that has “typically been a source of friction.”