How things went from bad to worse for the owner of the Stellantis Jeep

• Stellantis CEO Carlos Tavares is under pressure.
• Critics said Tavares cut too deep while reshaping the global automaker.
• Investors, dealers and union workers have all raised issues with Tavares’ leadership.

The owner of the Jeep Stellar is in turmoil.

Over the past year, the global automaker has seen declining sales, shrinking profit margins and a series of executive departures. Frustrated dealers, investors and union workers all seem united on one issue: CEO Carlos Tavares is a problem.

Critics have said Tavares, well-known in the auto industry for his corporate frugality, has cut too much as he reshapes the car company created by a 2021. mega fusion of Fiat Chrysler Automobiles and France’s PSA Group.

Wall Street is underwhelmed by the global automaker’s financial performance, dealers are frustrated by declining supply, and United auto workers the union is on the brink of a strike over lost product commitments.

Criticism of Tavares grew stronger after Stellantis issued a profit warning in late September, which signaled that margins would be lower than expected this year and that an extensive restructuring in North America would result in negative free cash flow.

After months of mounting pressure – plus an investor lawsuit – Stellantis confirmed that Tavares will retire after his contract expired in early 2026.

Until then, the Portuguese businessman will have to find a way to steer the company through one of the most turbulent times in its relatively short history.

A spokesperson for Stellantis said the investor’s lawsuit lacks merit and the company plans to “vigorously defend itself.” Stellantis is also taking legal action against the UAW, the spokesman added.

Stellantis dealers are fed up

Dealers have privately expressed concern for years about losing more affordable models to JeepChrysler and Dodge — cost-cutting moves that helped deliver record profits for Stellantis last year.

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In September, Tavares publicly lost the support of the National Council of Stellantis Dealers, which published an open letter accusing him of degrading the value of their brands by discontinuing so many models.

In the letter, signed by board chairman Kevin Farrish, traders accused Tavares of “reckless short-term decision-making” that had “devastating but entirely predictable consequences in the US market”.

Dave Kelleher, a Chrysler-Dodge-Jeep-Ram dealer in Pennsylvania, told Business Insider that the discounts at Jeepwhich include the affordable Cherokee and Renegade for the 2024 model year, were particularly damaging.

He said he was glad both models were set to return for the 2026 model year, but that he was losing customers in the meantime.

“Some bean counters made serious mistakes,” Kelleher said, referring to corporate employees. “I’m just asking why we would stop building the Cherokee before a new one is ready.”

Short term gain, long term pain

The numbers back up Kelleher’s displeasure.

Stellantis’ U.S. sales fell 17 percent through September from a year ago, weighed down by big volume losses at profit generators Ram and Jeep. Once the market leader, Jeep has ceded the more affordable SUV segments to competitors like Hyundai, dropping its market share below 10%.

Jeep, Chrysler and Dodge have them too the problem of oversupplywith a supply of more than 100 days for each brand at the end of the summer, according to Cox Automotive. This is compared to an industry average of 77 days supply.

This indicates that Stellantis offers are not in line with consumer demand. Ivan Drury, an auto analyst for auto shopping site Edmunds, pointed to price as a barrier to returning customers — once a strong point for Jeep in particular.

The average Stellantis vehicle sold for more than $56,000 in the second quarter, compared with an industry average of about $45,000 this year, according to industry data.

“If a customer has an older Stellantis product, the chances of them buying a new one are very, very low, especially compared to the rest of the industry,” Drury said. “A lot of that is because the ATP swing is so aggressive,” he added, referring to the average transaction price.

Discontinuing more affordable vehicles seems to have far-reaching implications for the company. Vehicle accessibility it is more important now than it has been in the last few years as customers tighten their purse strings amid inflation and higher interest rates.

And factories running out of products became a battleground for the UAW.

UAW threatens strike

The Illinois plant where Stellantis built the discontinued Jeep Cherokee is at the center of the UAW’s standoff with Tavares.

The union said it was ready to strike if Stellantis did not resume product commitments for the plant, adding that the withdrawal of investment violated them. contract 2023. Stellantis, instead, filed a lawsuit accusing the union of breaching the contract with its strike authorization votes.

After a historic strike at all three Detroit auto companies last fall, the UAW won the right to strike over product commitments. However, Stellantis says these commitments are always subject to change based on market conditions.

As dealers and investors took the chance to question Tavares’ leadership on a sunny October afternoon, a more direct and profane chant rang out in the parking lot of a local Stellantis UAW union: “Shitcan Carlos “.

At a rally to pressure Stellantis to keep his job commitments at the Illinois plant where he previously built the Cherokee, UAW President Shawn Fain said it was “once again up to UAW members to save this company from itself”.