Why automotive manufacturing firm Stellantis, owner of Jeep, is struggling | World News
Stellantis, an automotive colossus that owns more than a dozen brands including Chrysler, Fiat, Jeep, Peugeot, and Ram, is facing challenges at seemingly every turn.
The company’s sales and profit have been plummeting. Dealers stuck with parking lots filled with unsold cars are publicly criticising Stellantis and its chief executive in unusually harsh terms. Stellantis’s stock price has fallen almost 50 per cent from its high point in March. And the union that represents its US factory workers is threatening to go on strike at several plants.
United Automobile Workers locals are expected to vote in the coming days to authorise 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 Stellantis chief executive, who races cars in his spare time. After taking the reins at the French carmaker PSA in 2014, he acquired a series of rivals to build a company that last year sold more cars than General Motors did.
Last week, Stellantis said it was evaluating who should lead the company when Tavares’s contract expires in early 2026. 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 over half of its profit in the first six months of 2024, meaning that problems here reverberate across the Atlantic. “I wouldn’t want to be Carlos Tavares,” said Erin Keating, the 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 did in recent years, Ms. Keating said, and waited longer to offer discounts when demand slowed. High interest rates made those prices even more unpalatable to car buyers. As a result, many people who are ready to trade in Jeep Wagoneers or Dodge Chargers that they bought three or four years ago can’t afford the latest models.
Dodge dealers have, on average, 149 days of supply on lots, including many 2023 models, according to Cox. That is almost twice the industry average. Market share of Stellantis brands in the United States had fallen to 8.6 percent as of 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 car dealers, blamed decisions that favored short-term profits and helped Mr. Tavares qualify for a 50 percent pay raise last year, earning nearly $40 million.
“The reckless short-term decision-making to secure record profits in 2023 has had devastating, yet entirely predictable, consequences in the U.S. market,” Mr. Farrish and other members of the council 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 automotive chief executives’, taking into account corporate profits.
©2024 The New York Times News Service
First Published: Oct 01 2024 | 12:05 AM IST
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