- Car Dealership Guy News
- Posts
- The great decline of a legacy brand
The great decline of a legacy brand
A history of bad decisions
Hey, everyone. Want to make sure you get every email I send? Start by making sure this newsletter lands in the right inbox (I spend too much time on this for it to hit spam đ€Ł ):
Gmail users, move this email to your primary inbox.
Apple Mail users, add this to your VIP list.
Outlook users, pop this on over to your favorites.
Thank you! Now letâs get into a big deep dive on a major brandâs potential downfallâŠ
âCDG
First time reading the CDG Newsletter? Subscribe here.
Todayâs Biggest News
The Great Decline of a Legacy Brand
Is there an expiration date on a legacy brand? I hope not, because weâre witnessing the slow decaying of a collection of storied brands in real time.
Hereâs whatâs driving the news: Stellantis just laid off 400 employees across its engineering, software, and technology organizations. Thatâs 2% of its nonunion US workers (as my followers saw first). The reason? To âimprove efficiency and optimize its cost structure,â as the c-suite says.
Worth noting: Stellantis offered 33,500 US employees voluntary exit packages to cut costs and streamline operations in April of last year. And in November, the brand offered buyouts to 6,400 employees after striking a new labor agreement with the UAW.
This round of layoffs is significant for two big reasons:
Layoffs impacted white collar Stellantis employees. People working in corporate tend to be harder to replace than those working in production, suggesting to me that these arenât layoffs thatâll be reversed any time soon. This is a strategic shift in direction.
Lots of smart people have suggested this is just the first round of several layoffs for Stellantis workers. FYI, the federal Worker Adjustment and Retraining Notification Act (you might know it as the WARN Act) requires 60-day advance public disclosure whenever companies lay off at least 500 employees within a 30-day period. Sticking right under 500 employees might suggest Stellantis is doing layoffs in waves to skirt the WARN Act... maybe.
So how did we get here? Itâs been a rough five years for Stellantis, and its Dodge, Chrysler, Jeep, and Ram brands have struggled to keep pace with a changing automotive market. Letâs take a look back at what kicked off this slow decline at Stellantis â
Issue 1: Price increases. Stellantisâ brands have collectively increased prices by 50% over the past five years. Thatâs more than 2x the overall economyâs inflation over the same period and well ahead of most other car brands in the US.
Via CarEdge
Issue 2: Moving upstream. Stellantis has been strategically positioning itself in a more luxury category over the last handful of years (which explains the rising prices). In March of 2021, Stellantis reintroduced the Wagoneer and Grand Wagoneer as a âpremium extensionâ of the Jeep brand. For the 2024 model year, the Wagoneer starts at $62,545âŠalmost $10K more than many of its comps.
Issue 3: Making risky hedges. Now this one isnât confirmed, but my two cents on the above strategic pivots? Stellantis could have been trying to hedge the reality that Chinese manufacturers will soon enter the US with really cheap models. Itâs entirely possible that Stellantis has been trying to cement itself in the luxury category to avoid a competitive brawl with Chinese automakers in the mid-market segment.
NowâŠall of those pivots could have potentially paid off. But what Stellantis couldnât plan for was the impact of Covid-19 on the automotive industry. Interest rates spiked suddenly and pretty unexpectedlyâand that resulted in drivers seeking affordability and low prices first and foremost.
Stellantis was focusing on luxury as buyers started to gravitate toward the opposite end of the spectrum: no frills deals. And in doing so, Stellantis cannibalized its own brand.
Which brings us to today. As of Q4âŠ
Stellantis sales dropped 1%, even as the total market was up 8%.
The automaker posted lower sales volumes despite the fact that incentives were up 166% on average to $4,404 per vehicle.
Stellantisâ average transaction prices increased 6% to $59,292 while other automaker ATPs mostly either declined or stayed flat.
At the end of last year, Chrysler and Dodge both reported at least twice the industry average days supply. Jeep and Ram were also well north of their peersâ supply. Thatâs part of why Stellantis recently promised US dealers it would reduce inventory by one-third through incentives and repricing some high-volume models.
Via Cox
Stellantis is clearly going through it. The company went as far as reinvoicing cars theyâve sold to dealers. Complaints about quality from Stellantisâ collection of brands are piling up online (people are ruthless on the internet, see this Reddit thread). And, while anecdotal, this DM I got from a follower is a pretty good encapsulation of the state of the brand:
Via CDG Media
Itâs brutal to see a brand like this decay so fast. Stellantis was formed officially only a few years back when Fiat Chrysler and PSA Group merged, but many of its brands have been around for 100+ years.
Do I think the brand is done-zo? Absolutely not, but itâs definitely in for a reckoning.
Itâs hard to say exactly where Stellantis goes from here (although Iâd bet heavily on more price drops). After a run of strategic decisions lacking industry savvy, it seems like it wonât be done spinning its wheels for a while. Iâll be keeping a close eye on what happens to the brand, its network of dealers, and its hundreds of thousands of workers.
What do you think the future holds for Stellantis?Click one to tell me more. |
This Weekâs Episodes of the CDG Podcast
This was epic. I introduced my brand new monthly show: Car Dealership Guy Market Update, brought to you by Edmunds. And we kicked things off right with Jessica Caldwell, Head of Insights at Edmunds, and Kevin Frye, eCommerce director at Jeff Wyler Automotive. We hit on everything from best and worst selling models to my theory about hybrids continuing to dominate to AI selling cars. Donât miss this one.
Want to know the secrets to a $1B dealership marketing playbook? Ron Andrews, VP of business development at Cars Commerce, broke it down for me. Ron also told me more about the best tactics to understand the car shopperâs mindset and his POV on whatâs disrupting digital marketing permanently. This one was full of insights.
Listen to the episodes here, and subscribe to the CDG Podcast on Apple, Spotify, or wherever else you get your podcasts. And thank you to Cars Commerce, Edmunds, CDK Global, Withum for making these episodes possible.
Together with Cars Commerce
You know your storeâs reputation is essential to the health of your businessâbut do you know how to diagnose it? đ©ș
With so many reviews to read through, it's not easy to identify which specific aspects of your experience are resonating well (and not so well) with your customers.
Dealers: Check out your Cars Commerce Experience Report. đđ
This free report measures and tracks customer sentiment for each aspect of your experienceâfrom lead follow-up to financingâand helps you benchmark those perceptions against your local market and OEM averages.
Improve your experience. Build your reputation. Promote what makes you different. It all starts with using data to diagnose where you are today.
Highlights from the CDG Job Board
Weâve got tons of great jobs (in addition to our own) hitting the CDG Job Board right now. Here are some standouts for anyone looking for their next move.
New grad looking for an epic first job? Kinetic Advantageâs Sales Development program is a 6- to 12-month rotational program designed for recent graduates. Check it out.
Ready for the next level in your sales or management career? CarNow is hiring for regional sales managers in a ton of markets: Denver, the mid-Atlantic, LA, Atlanta, and Houston.
Really into auto tech? Friend of CDG, AutoFi, is hiring an automotive SaaS account exec.
Looking to hire? Add your roles todayâitâs 100% free.
The Backlot
Sales of Ferraris in Taiwan have doubled in the past four yearsâŠthank you, newly minted chip entrepreneurs.
Nissan is paying dealers cash to take vehicles from a backlog of unsold factory inventory. Looks like the pressure is on for the end of its fiscal year March 31.
Detroit is stressed about how cheap Chinese EVs areâŠeven if itâs unclear when theyâll make it to US markets.
Most US drivers either express fear (at 66%) or uncertainty (at 25%) about fully self-driving vehicles, according to AAA.
Auto insurance costs are rising at the fastest rate in 47 years. Hereâs why.
Honda is squeezing US dealersâ profit margins to help cushion the cost of its transition to EVs.
Thanks for reading. I want to make sure I can keep delivering the best car market insights, no matter where youâre reading them. So if youâve ever enjoyed CDG content, do me a favor and follow me on other platforms. You can do it in two clicks here.
Thank you, everyone. You rock. See you next week.
âCar Dealership Guy
Did you like this edition of the newsletter?Tell us what you think - we want to be the best. |
Want to advertise with CDG? Click here.
Want to be considered as a guest on the CDG podcast? Right this way.
Want to pitch a story for the newsletter? Share it here.
Reply