Canada’s federal government issued a notice of default to Stellantis N.V. after the automaker announced it would move Jeep Compass production from the Brampton, Ontario plant to the Belvidere, Illinois facility. The move, announced in October 2025, violates the terms of a CAD 500 million aid package that the government provided to modernize Stellantis’ Canadian operations.
The aid package, which has already delivered about CAD 222 million in support over the past three years, was contingent on Stellantis maintaining a full Canadian manufacturing footprint. By relocating the Compass line, Stellantis breached that condition, prompting the government to suspend the remaining aid and threaten legal action. Industry Minister Mélanie Joly said the decision protects Canadian jobs and recalls the 2009 Chrysler bailout, underscoring the government’s expectation of loyalty from the company.
Stellantis has responded that it believes it has honored its commitments. The company said the Brampton plant is on an operational pause while it evaluates future plans, and it highlighted a third shift at its Windsor plant as evidence of continued investment in Canada. Nevertheless, the default could add significant cost pressure to Stellantis’ North American operations, as the company already faces margin compression and a €1.5 billion tariff impact in 2025.
The production shift is part of Stellantis’ broader $13 billion U.S. investment plan aimed at mitigating tariff costs and securing supply‑chain resilience. Reopening the Belvidere plant will cost $600 million and is expected to reduce the company’s exposure to the 7.5 % tariff on Canadian‑made vehicles. The move also aligns with the automaker’s strategy to accelerate new model launches, including 10 new vehicles slated for 2025.
Financially, Stellantis has been under pressure. In the first half of 2025 the company reported a €2.3 billion net loss and negative industrial free cash flow of €3 billion, with an adjusted operating income margin of only 0.7 %. Management has reiterated its H2 2025 guidance, projecting modest revenue growth and a return to low‑single‑digit AOI margins, while acknowledging ongoing cost inflation and competitive pricing pressure.
Market reaction to the default notice has been mixed. While analysts have noted the company’s strategic restructuring and growing institutional interest, the default underscores the regulatory risk and potential job losses in Canada, tempering enthusiasm for the company’s near‑term outlook.
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