The company’s sales and profits are declining. Dealerships stuck with parking lots filled with unsold cars publicly criticized Stellantis and the CEO in uncharacteristic terms. Stellantis’ share price has fallen almost 50% from its high point in March. And unions representing U.S. factory workers are threatening to strike at some factories.
The United Automobile Workers are being asked to vote in the coming days to authorize strikes against some of Stellantis’ factories, protesting what they say are broken promises by the automaker.
The issue raises questions about the future of Carlos Tavares, CEO of Stellantis, who races cars in his spare time. After taking the reins at French carmaker PSA in 2014, he took on several rivals to build a company that last year sold more cars than General Motors.
Last week, Stellantis said it was evaluating who should lead the company when Tavares’ contract expires in early 2026. Tavares could remain CEO, Stellantis said, but that statement hardly amounts to conviction.
In 2021, PSA merged with Fiat Chrysler, and the combined company adopted the name Stellantis. While the company is based in Amsterdam, its US operations accounted for more than half of Stellantis’ profits in the first six months of 2024, meaning the problem here is across the Atlantic. And the problem runs deep, analysts say. “I don’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 have raised prices more than other automakers in recent years, Keating said, and have waited longer to offer discounts when they’re on demand. High interest rates make the price even more unattractive to car buyers. As a result, many people who are ready to trade in their Jeep Wagoneers or Dodge Chargers that they bought three or four years ago are unable to afford the latest models.
Dodge dealers have an average of 149 days of supply on lots, including many 2023 models, according to Cox. That’s almost twice the industry average. Stellantis brand market share in the United States had fallen to 8.6% at the end of June from 10.4% a year earlier, Cox said.
The dealer was furious. Kevin Farrish, chairman of the Stellantis National Dealer Council, which represents a company’s car dealers, was blamed for the decision that favored short-term profits and helped Tavares qualify for a 50% pay raise at the end of the year, earning almost $40 million.
“Reckless short-term decision-making to secure record profits in 2023 has had devastating, but predictable, consequences on the US market,” Farrish and other board members wrote in a letter to Tavares this month. “The consequences include the rapid degradation of the iconic American brand.”
“You are making this a problem,” the traders wrote in an uncharacteristically direct rebuke.
Stellantis declined to make Tavares available for an interview. In a statement, the company said the compensation is in line with other automotive CEOs, taking into account the company’s profitability.
The president of the UAW, Shawn Fain, has been strident in his criticism of Tavares, accusing him of backpedaling on a promise to revive operations at the shuttered factory in Belvidere, Illinois, and planning to move production of the Dodge Durango, a large SUV, from Detroit to Canada.
“Either we allow out-of-control CEOs and their billionaire backers who have enjoyed years of record profits to shut down plant after plant and continue to destroy our country,” Fain told union members last week, “or we stand.”
The confrontation between Stellantis and the UAW comes a year after a strike helped workers win a record pay raise. As part of the contract that ended the strike, workers gained the right to walk out if the company did not meet its commitments – a right now threatened by unions.
The company denied that it violated any commitment to the UAW, and said it has not confirmed plans to move production to Durango.
“Stellantis has complied, and will continue to comply, with the agreement of the parties in 2023,” Carlos Zarlenga, chief operating officer of Stellantis North America, said in an email to Fain last Monday.
The problems at Stellantis have cast doubt on a series of acquisitions over the past decade that have made it the fourth-largest carmaker after Toyota, Volkswagen and Hyundai-Kia. (Stellantis is fifth if the alliance of Renault, Nissan and Mitsubishi is considered as one company.)
The deal led by Tavares is supposed to allow the company’s car brands to share the cost of developing new technologies and save money by using common components. The reason is that larger automakers have a better chance of surviving the upheaval caused by the industry’s shift to electric vehicles and autonomous driving.
The gains have not materialized as the company had hoped, analysts said. The company disagreed, saying in a statement that merging automakers has saved $8 billion since 2019.
Stellantis offers a wide selection of midsize and small cars in Europe. But in the United States, Jeep’s model line-up is largely in favor of higher-priced large SUVs after discontinuing the smaller Cherokee and Renegade models last year. The change comes as cost-conscious buyers begin to show preference for small SUVs like the Toyota RAV4, Chevrolet Trax and Honda CR-V.
And Stellantis couldn’t stop the decline of Chrysler, which started decades ago and was once a strong competitor to Chevrolet and Ford Motor. Chrysler’s lineup has been reduced to one vehicle – the Pacifica minivan, which is available as a plug-in hybrid or with a conventional gasoline engine. (Chrysler is still selling its remaining inventory of the 300 sedan, which it stopped producing last year.)
Stellantis said it is taking steps to gain market share, including cutting the starting price of its most expensive model, the Jeep Compass, to below $30,000. The company said this week that it will revive the Chrysler Voyager minivan with a starting price of $40,000, slightly less than the most expensive Pacifica. The new Voyager will go on sale later this year.
Bigger discounts on models like the Ram 1500 Classic pickup helped Stellantis sales in the United States and Canada jump 20% in August, the company said.
However, with so many vehicles not selling, Stellantis is facing pressure to reduce production and cut jobs, “which obviously upsets the UAW,” said Kevin Roberts, director of industry analytics and insights at CarGurus, an auto shopping website.
Dealers complain that the company does not have a clear strategy.
“Our business is suffering. Our employees are suffering,” said Sean Hogan, vice president of Sierra Auto Group, which owns the Stellantis dealership in Los Angeles. “We don’t see any plans to bring us back to the volume we once had.”
Hogan, also secretary of the company’s dealer council, said he met with Stellantis’ top executives last Friday but was not satisfied with what he heard. The automaker still does not provide incentives that are generous enough to increase sales and allow dealers to make a decent profit, he said in an email.
Fain, the UAW president, told members that at least one local union would hold a strike authorization vote. Under the terms of the contract with Stellantis, the union will be required to meet at least seven times with management to try to resolve the grievance. A strike will happen only if negotiations are unsuccessful.
In the short term, the factory shutdown by striking workers could be a boon for Stellantis, buying time to clear out many of the vehicle dealers who are not selling. But the company would also damage its brand by alienating car buyers sympathetic to union demands.
“Labor unrest is never a good thing,” said Keating of Cox Automotive.
