Owner of Fiat and Jeep faces drop in sales in the USA – 09/29/2024 – Market

Stellantis, an automotive giant that owns more than a dozen brands, such as Chrysler, Fiat, Jeep, Peugeot and Ram, is facing challenges on practically all fronts.

The company’s sales and profits are plummeting. Dealerships with yards full of unsold cars are publicly criticizing the company and its CEO in harsh terms. Stellantis’ share price has fallen nearly 50% since its high in March. And the union that represents its workers in U.S. factories is threatening to strike at several plants.

Regional chapters of the United Automobile Workers (UAW) are expected to vote in the coming days to authorize strikes against several Stellantis factories, protesting what they say are broken promises by the automaker.

The problems are raising questions about the future of Carlos Tavares, the CEO of Stellantis, who runs in his spare time. After taking over French automaker PSA in 2014, he acquired a series of rivals to build a company that last year sold more cars than General Motors.

Last week, Stellantis said it is evaluating who should lead the company when Tavares’ contract expires in early 2026. Tavares could continue as CEO, Stellantis said, but the statement was far from a vote of confidence.

In 2021, PSA merged with Fiat Chrysler, and the resulting company adopted the Stellantis name. Although the company is based in Amsterdam, its US operations accounted for more than half of Stellantis’ profit in the first six months of 2024, meaning the country’s problems are reverberating across the Atlantic. And the problems run deep, analysts say.

“I wouldn’t want to be Carlos Tavares,” said Erin Keating, senior director of economic and industry insights at consultancy Cox Automotive.

Jeep and other Stellantis brands have raised prices more than other automakers in recent years, Keating said, and have been slower to offer discounts when demand has slowed. High interest rates have made these prices even more unpalatable for buyers.

As a result, many people who are ready to trade in their Jeep Wagoneers or Dodge Chargers that they purchased three or four years ago cannot afford the newer models.

Dodge dealers have, on average, 149 days of inventory on the lot, including many 2023 models, according to Cox. That’s nearly double the industry average.

The market share of Stellantis brands in the United States fell from 10.4% last year to 8.6% at the end of June, the consultancy said.

Dealership directors are furious. Kevin Farrish, chairman of the Stellantis National Dealer Council, which represents the company’s independent dealers, blamed decisions that favored short-term profits and helped Tavares qualify for a 50% pay raise last year, earning nearly $40. million.

“Reckless short-term decision-making to ensure record profits in 2023 has had devastating but entirely predictable consequences in the U.S. market,” Farrish and other board members wrote in a letter to Tavares this month. “These consequences include the rapid degradation of our iconic American brands.”

“You created this problem,” the dealers wrote in an unusual direct rebuke.

Stellantis declined to make Tavares available for an interview. In a statement, the company said his compensation was in line with that of other automotive CEOs, taking into account corporate profits.

UAW President Shawn Fain has been equally scathing in his criticism of Tavares, accusing him of backtracking on promises to revive operations at a shuttered factory in Belvidere, Illinois, and of planning to move production of the Dodge Durango SUV from Detroit to Canada.

“Either we allow an out-of-control CEO and his billionaire supporters, who have enjoyed years of record profits, to close plant after plant and continue destroying our country,” Fain told union members last week, “or we resist.”

Stellantis offers a wide selection of midsize and small cars in Europe. In the United States, however, Jeep’s model lineup is heavy on large, more expensive SUVs, after discontinuing the smaller Cherokee and Renegade models last year.

This change occurred just as price-sensitive buyers began to show a preference for smaller SUVs like the Toyota RAV4, Chevrolet Trax and Honda CR-V.

And Stellantis has failed to halt Chrysler’s decline, which began decades ago and was once a formidable rival to Chevrolet and Ford. Chrysler’s lineup has shrunk to a single vehicle — the Pacifica minivan, which is available as a plug-in hybrid or with a conventional gasoline engine. The brand is still selling the remaining stock of the 300 sedan, whose production was halted last year.

Stellantis said it was taking steps to regain market share, including reducing the starting price of its cheapest model, the Jeep Compass, to less than $30,000. The company said last week it would revive the Chrysler Voyager minivan with a starting price of $40,000, slightly lower than the cheapest Pacifica. The new Voyager will go on sale later this year.

Deeper discounts on models like the Ram 1500 Classic pickup truck helped Stellantis sales in the United States and Canada soar 20% in August, the company said.

Still, with so many unsold vehicles, Stellantis faces pressure to reduce production and cut jobs, “which is obviously disruptive to the UAW,” said Kevin Roberts, director of industry analytics and insights at CarGurus, a shopping website. of cars.

Dealership directors complain that the company does not have a clear strategy.

“Our businesses are hurting. Our employees are hurting,” said Sean Hogan, vice president of Sierra Auto Group, which has Stellantis dealerships in Los Angeles. “We’re not seeing a plan to bring us back to the volume we had before.”