Why Stellantis, owner of Chrysler, Jeep and Ram, is struggling

The company’s sales and profit have been plummeting. Dealers stuck with parking lots filled with unsold cars are publicly criticizing Stellantis and its CEO in unusually harsh terms. Stellantis’ stock price has fallen almost 50% from its high point in March. And the union that represents its U.S. factory workers is threatening to go on strike at several plants.

United Automobile Workers locals are expected to vote in the coming days to authorize 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 CEO, who races cars in his spare time. After taking the reins at 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’ contract expires in early 2026. Tavares could remain CEO, Stellantis said, but the statement was hardly a vote of confidence.

In 2021, PSA merged with Fiat Chrysler, and the combined company adopted the name Stellantis. While the company is based in Amsterdam, its U.S. operations accounted for more than half of Stellantis’ profit in the first six months of 2024, meaning that problems here reverberate across the Atlantic. And the problems are deep, analysts say. “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, 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% as of the end of June from 10.4% a year earlier, Cox said.

Dealers are furious. Kevin Farrish, chair of the Stellantis National Dealer Council, which represents the company’s independent car dealers, blamed decisions that favored short-term profits and helped Tavares qualify for a 50% 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,” Farrish and other members of the council wrote in a letter to 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 Tavares available for an interview. In a statement, the company said his compensation was in line with other automotive CEOs’, taking into account corporate profits.

The president of the UAW, Shawn Fain, has been just as strident in his criticism of Tavares, accusing him of backpedaling on promises to revive operations at a shuttered factory in Belvidere, Illinois, and of planning to move production of the Dodge Durango, a large SUV, from Detroit to Canada.

“Either we allow an out-of-control CEO and his billionaire backers who have enjoyed years of record profits to close plant after plant and continue destroying our country,” Fain told union members last week, “or we stand up.”

The confrontation between Stellantis and the UAW comes a year after strikes helped workers win record pay raises. As part of the contract that ended those strikes, workers won the right to walk out if the company didn’t meet its commitments — a right that the union is now threatening to invoke.

The company denied that it was violating any commitments to the UAW, and said it had not confirmed plans to move Durango production.

“Stellantis has abided, and will continue to abide, by the agreement the parties reached in 2023,” Carlos Zarlenga, the chief operating officer of Stellantis North America, said in an email to Fain last Monday.

The problems at Stellantis raise doubts about the series of acquisitions during the last decade that 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 one company.)

The deal-making led by Tavares was supposed to allow the company’s car brands to share the costs of developing new technology and save money by using common components. The rationale was that bigger carmakers had a better chance of surviving the upheaval caused by the industry’s shift to electric vehicles and autonomous driving.

Those benefits have not materialized as much as the company hoped, analysts said. The company disagreed, saying in a statement that combining the automakers had saved $8 billion since 2019.

Stellantis offers a wide selection of midsize and small cars in Europe. In the United States, however, Jeep’s model lineup is heavy on higher-priced, large SUVs after it discontinued the smaller Cherokee and Renegade models last year. That change came just as cost-conscious buyers began showing a preference for smaller SUVs like the Toyota RAV4, Chevrolet Trax and Honda CR-V.

And Stellantis has been unable to arrest the decline of Chrysler, which began decades ago and was once a formidable rival to Chevrolet and Ford Motor. Chrysler’s lineup has dwindled to one vehicle — the Pacifica minivan, which is available as a plug-in hybrid or with a conventional gasoline engine. (Chrysler is still selling off remaining inventory of the 300 sedan, which it stopped producing last year.)

Stellantis said it was taking steps to regain market share, including cutting the starting price of its least-expensive model, the Jeep Compass, to below $30,000. The company said this week that it would revive the Chrysler Voyager minivan with a starting price of $40,000, slightly less than the least-expensive Pacifica. The new Voyager will go on sale at the end of this year.

Bigger discounts for models like the Ram 1500 Classic pickup helped Stellantis sales in the United States and Canada surge 20% in August, the company said.

Still, with so many unsold vehicles, Stellantis faces pressure to throttle production and cut jobs, “which is obviously upsetting to the UAW,” said Kevin Roberts, director of industry analytics and insights at CarGurus, a car shopping website.

Dealers complain that the company does not have a clear strategy.

“Our businesses are suffering. Our employees are suffering,” said Sean Hogan, the vice president of Sierra Auto Group, which owns Stellantis dealerships in Los Angeles. “We’re not seeing a plan to bring us back to a volume we once had.”

Hogan, also the secretary of the company’s dealer council, said he met with top Stellantis executives last Monday but was not satisfied by what he heard. The automaker is still not offering 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 union local would hold a strike authorization vote soon. Under the terms of the contract with Stellantis, the union would be obligated to meet at least seven times with management to try to resolve its grievances. A strike would happen only if the talks were unsuccessful.

In the short term, factory shutdowns by striking workers may be a blessing in disguise for Stellantis, buying time to clear dealer lots of unsold vehicles. But the company would also risk damaging its brands by alienating car buyers who are sympathetic to union demands.

“Labor unrest is never good,” said Keating of Cox Automotive.