Stellantis Dealers Criticize CEO Over Brand Decline and Inventory Issues

In a strongly worded letter dated September 10, 2024, leaders of Stellantis’ U.S. dealer network expressed deep frustration with CEO Carlos Tavares, accusing him of mismanaging the company’s American brands. The dealers specifically called out the “rapid degradation” of the Chrysler, Dodge, Jeep®, and Ram brands, citing a series of decisions they believe have negatively impacted their businesses and customer experience.

The letter, which was issued by the Stellantis National Dealer Council, criticized Tavares for prioritizing short-term profits over long-term brand health. According to the dealers, this approach boosted the company’s profits last year and increased the CEO’s compensation but ultimately shrank Stellantis’ market share in the U.S. “For over two years now, the U.S. Stellantis National Dealer Council has been sounding this alarm to your US executive team, warning them that the course you had set for Stellantis was going to be a disaster in the long run,” the letter stated. “A disaster not just for us, but for everyone involved — and now that disaster has arrived.”

One of the council’s main complaints revolves around the growing number of unsold vehicles on dealer lots. Despite Stellantis’s efforts to clear this inventory, such as price cuts and renewed incentives, the dealers said these actions have not been enough. The letter added that the company’s decision to reduce marketing funds and change dealer compensation policies has only worsened the situation.

While Stellantis had rolled out national incentive campaigns this summer, including discounts of up to $2,000 on various models, many retailers felt it wasn’t sufficient to address the core issue of stagnant inventory. The company’s brands are currently sitting on some of the industry’s highest days’ supply numbers, indicating that cars are lingering on dealer lots for too long.

A Stellantis dealer who spoke anonymously about the situation said, “Last month, we grabbed a little share back… But it’s going to take too many months to get us where we really need to be.”

One major concern raised by dealers is the insufficient allocation of desirable trim levels for certain models. Base models of popular vehicles such as the Jeep Grand Cherokee (WL) and Wrangler (JL) have been hard to obtain, which the dealers say has contributed to their struggles. Although Stellantis has recently allowed more of these base models to be ordered, the delay in meeting demand has further complicated their ability to stay competitive in the market.

The letter also highlighted that some of Stellantis’ cost-saving measures, such as tying dealer compensation to vehicle shipments rather than sales and slashing co-op marketing funds, have harmed dealer profitability. “All those things have a detrimental effect on dealer profitability,” the dealer noted.

This is not the first time the dealers have raised their concerns. In May, they sent another letter to Tavares outlining similar issues. A follow-up meeting with Tavares and North America COO Carlos Zarlenga took place in Detroit, where dealers voiced their frustrations over pricing strategy and inventory allocation. However, as the September letter makes clear, progress has been slow, and more aggressive action is needed to prevent further market share losses.

The dealers warned that Stellantis’ strategy to “engineer” its profits in 2023 has now backfired. “The bill has come due for the decisions made last year,” the council stated. They criticized the company’s attempt at a “soft landing” that came at the expense of employees, dealers, and suppliers, calling it “frankly just wrong.”

Although Stellantis has yet to respond publicly, it’s reported that Tavares, who is currently in Detroit, plans to meet with dealer council leadership to discuss their concerns. Whether this meeting will result in the changes dealers are demanding remains to be seen.

Source: Automotive News