Tavares, who last week pushed out the carmaker’s chief financial officer and the chief operating officers for both North America and Europe in a management restructuring, told reporters at the Paris Motor Show that he is responsible for the bad things that have happened at the company, but also for the good.
“If I don’t want that responsibility I should do something else,” said Tavares, who reiterated that he plans to retire when his contract expires in 2026. Last month, the board confirmed that it was searching for a successor.
Tavares also said he should get credit for successfully merging the companies and making Peugeot and Opel profitable during the past decade.
He said the company is in a “Darwinian period,” and nothing is off the table including plant closures or shutting down brands. “When you are fighting for survival, you have to consider everything is on the table.”
Stellantis, formed from the 2021 merger of France’s PSA Peugeot and Fiat Chrysler Automobiles, has struggled this year in both Europe and the US.
In the European Union, it is fighting cuts in government electric vehicle subsidies and Chinese competitors as it tries to sell more EVs to reach a goal of cutting greenhouse gas emissions 55% by 2030. The EU has planned tariffs on imported Chinese EVs.
Sales have been down most of the year in the US, and discounts to counter high sticker prices that came after a poor second quarter didn’t work. Third-quarter sales fell 20%, and they’re down over 17% for the first nine months. The rest of the auto industry saw sales increase 1% from January through September.
In the US, Stellantis’ dealer inventory ballooned to just over 430,000 vehicles in June.
Tavares said Monday that has dropped by 52,000 in recent months, and the company is trying to get below 350,000 by Christmas for a “fresh start” going into the new year. He expects the new leadership team to produce stronger profits and better customer satisfaction.
But David Kelleher, owner of a Stellantis dealership near Philadelphia, said dealers still have a 4 1/2 month supply of some models. Three years ago, he sold 170 new vehicles per month. Now he’s down to 90, and has to make up for the lost transactions by selling more used cars.
Stellantis needs to start building gas-powered and hybrid vehicles that people now want to buy, and hold off on EVs until a better charging system is in place, Kelleher said. “I think if we don’t radically change our philosophy on product, we’re going to have a bigger issue, and one that is much harder to dig our way out of,” said Kelleher, a member of the company’s national dealer council. .
Kelleher said the company got out of sedans and has no midsize SUV, the largest part of the US market.
Struggles in Europe and the US pushed first-half net profits down 48% compared with the same period last year. That led Stellantis to slash full-year financial forecasts.
The company also has labor problems. In Italy, a union is calling for a one-day strike on Friday to protest production cuts. The United Auto Workers in the US is threatening strikes at several plants, alleging that Stellantis isn’t keeping commitments to build vehicles.
Ivan Drury, director of insights at Edmunds, said Stellantis for years has lacked affordable models that many buyers in the US now want.
The coronavirus pandemic and global computer chip shortage saved the company from a reckoning over the issue, Drury said, because many buyers spent big on large, expensive vehicles when they couldn’t travel or dine out.
With too few computer chips, automakers limited production to high-profit loaded-out vehicles.
But now, as the chip shortage has eased, most people are looking for more affordable transportation, with still-high interest rates, Drury said. “You’ve got people who are looking at practicality and just want basic stuff,” he said. “They (Stellantis) don’t have anything in that realm.”
As a result, Stellantis vehicles sit on dealer lots for 100 days before selling, double the industry average, Drury said.
Much of Stellantis’ product lineup is old, with few recent updates, including its top seller, the Ram pickup, which got only a modest refresh this year, said Sam Abuelsamid, mobility analyst for Guidehouse Insights.
“They don’t necessarily have the right products in the right segments,” he said. “There’s a bunch of stuff coming, but it’s not here yet.”
The company has little in the way of affordable vehicles. For example, the Jeep Compass small SUV has one version starting around $26,000 excluding shipping, most versions are priced over $30,000.
The company does have plans for a new small electric Jeep costing around $25,000, Abuelsamid said.
Dealers have revolted, calling publicly for increased discounts to move the vehicles.
Drury doesn’t see a quick way out of the situation because it can take years to roll out new vehicles to match market demand. The company got out of midsize and compact cars in the US nearly a decade ago.
So there’s little Tavares can do to fix things quickly, Abuelsamid said. “Aside from incentives and price cuts, not really,” he said.
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First Published Date: 15 Oct 2024, 06:40 AM IST
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