Why car manufacturer Stellantis, owner of Jeep, is having a hard time
Stellantis, an auto giant that owns more than a dozen brands including Chrysler, Fiat, Jeep, Peugeot and Ram, is facing challenges on seemingly every front.
The company’s sales and profits have fallen. Dealers stuck with parking lots full of unsold cars are publicly criticizing Stellantis and its CEO in unusually harsh terms. Stellantis’ stock price has fallen nearly 50 percent from its March high. And the union representing its American factory workers is threatening to strike in several factories.
United Automobile Workers locals are expected to vote in coming days to authorize strikes against several Stellantis factories to protest what they say are broken promises from the automaker.
The problems raise questions about the future of Stellantis CEO Carlos Tavares, who races cars in his spare time. After taking charge of French automaker PSA in 2014, he acquired a series of rivals to build a company that sold more cars than General Motors last year.
Last week, Stellantis said it was evaluating who should lead the company when Tavares’ contract expires in early 2026. In 2021, PSA merged with Fiat Chrysler and the combined company adopted the name Stellantis. Although the company is based in Amsterdam, its US operations accounted for more than half of its profits in the first six months of 2024, meaning the problems here are reverberating across the Atlantic. “I wouldn’t want to be Carlos Tavares,” said Erin Keating, senior director of economic and industry insights at Cox Automotive, a market research firm.
Jeep and other Stellantis brands raised prices more than other automakers in recent years, Ms. Keating said, and waited longer to offer discounts as demand waned. High interest rates made those prices even more unpalatable for car buyers. As a result, many people who are willing to own Jeep Wagoneers or Dodge Chargers that they bought three or four years ago cannot afford the latest models.
Dodge dealers have an average of 149 days of inventory on lots, including many 2023 models, according to Cox. That is almost double the sector average. The market share of Stellantis brands in the United States had fallen to 8.6 percent at the end of June from 10.4 percent a year earlier, Cox said.
Dealers are furious. Kevin Farrish, the chairman of the Stellantis National Dealer Council, which represents the company’s independent auto dealers, blamed decisions that boosted short-term profits for helping Mr. Tavares qualify for a 50-dollar raise last year percent, earning him nearly $40 million.
“The reckless, short-term decision-making to secure record profits in 2023 has had devastating, but entirely predictable, consequences for the U.S. market,” Mr. Farrish and other board members wrote in a letter to Mr. Tavares this month. “Those consequences include the rapid degradation of our iconic American brands.”
“You created this problem,” the dealers wrote in an unusually direct rebuke.
Stellantis declined to make Mr. Tavares available for an interview. In a statement, the company said his compensation was in line with other CEOs in the automotive sector, taking into account company profits.
©2024 The New York Times News Service
First publication: Oct 01, 2024 | 12:05 pm IST