Stellantis strikes back after dealer outcry

Stellantis pushed back against criticism after an open letter, written by the Stellantis National Dealer Council (SNDC), accused CEO Carlos Tavares of setting the company on course for “disaster.”

Driving the news: In a letter published Tuesday, dealers from the SNDC expressed alarm at the direction the company had taken, claiming that policies implemented by Tavares in 2023 have had “devastating, yet entirely predictable, consequences.” Stellantis’ response, issued in a statement, came Thursday evening.

• The company called the letter an example of “public personal attacks,” with dialogue that should have instead happened during its regular calls with dealers.

• A plan, previously developed alongside retailers, was already showing promising results, it continued, boosting sales 21% month-over-month in August and lowering retailer inventory by roughly 10% from June’s total.

• The automaker also said it would work with dealers “to avoid any public disputes that will delay our ability to deliver results.”

Zooming out: The SNDC’s letter did not demand a resignation or apology from the Stellantis Chief, remarking that “those do not put people back to work.” However, the dealer association accused Tavares of leading the brand into a crisis for the sake of scoring massive earnings last year.

• “In 2023, you engineered a record year of profitability for Stellantis,” the letter stated, noting the accomplishment had netted Tavares a $40 million compensation, the highest of any automotive CEO (excluding Tesla’s Elon Musk).

• Those earnings came with a heavy price, it continued, that being the “rapid degradation” of the company’s U.S. brands, Dodge, Jeep, Ram and Chrysler.

• The SNDC also cited grievances including the automaker’s diminished market share, collapsing stock price, layoffs, plant closures, executive departures, investor lawsuits and labor strikes.

Looking back: Conflict between dealer and manufacturer is rarely so public, but the outcry from the SNDC comes after years of deteriorating market performance at Stellantis, which seemed to accelerate in the first half of 2024.

• Sales dropped 21% in the first six months of the year, with declines hitting the entirety of Stellantis’ brand portfolio.

• As a result, revenues fell 14% and profits plummeted 48% from 2023.

Zooming in: Company leaders said they were taking “decisive actions to address operating challenges” in the brand’s last earning release. Over the last few months, we have seen what some of those actions might look like.

• A voluntary separation program has been introduced to cut back on labor costs, and new products are scheduled to launch in the U.S.

• Tavares has also said he would consider closing down unprofitable brands if needed, although the company has since walked those statements back.

• Whatever happens, however, progress is likely to be slow. August inventory numbers from Cox Automotive continued to show that Stellantis’ supply levels dwarf the industry average, as brands like Dodge carry around 30% of their previous model year vehicles.

Bottom line: It isn’t surprising to learn Stellantis doesn’t take kindly to public criticism from its dealer body and would rather these conversations happen behind closed doors. What remains unclear is whether the brand’s plan for addressing its challenges is taking effect…or what sacrifices it might require.

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