Stellantis' U.S. dealers call out CEO Tavares for damaging brands

Leaders of Stellantis's U.S. dealer network criticized CEO Carlos Tavares for the “rapid degradation” of the automaker’s brands and urged him to spend more money to clear old inventory off their lots.

The retailers accused Tavares of “short-term decision making” that boosted profits last year and padded the CEO’s compensation. The moves ended up shrinking the company’s market share and hurting the Jeep, Ram, Dodge and Chrysler brands, the national dealer council said in an open letter to Tavares dated Sept. 10.

Tavares has been cutting jobs and slashing capacity at American factories since a plunge in U.S. sales sliced first-half earnings nearly in half. Stellantis has taken steps this year to clear vehicle inventories, including cutting prices and bringing back incentives. But those steps have been insufficient as the company tries to protect its prized profit margins, according to dealers.

“For over two years now, the U.S. Stellantis National Dealer Council has been sounding this alarm to your U.S. executive team, warning them that the course you had set for Stellantis was going to be a disaster in the long run,” the group said in the letter. “A disaster not just for us, but for everyone involved — and now that disaster has arrived.”

Stellantis said it took exception to the letter and that it doesn’t believe public personal attacks are the most way effective way to solve problems.

The company said it introduced an action plan in August that was developed with dealer input.

The plan, the company says, is already showing results. According to Stellantis, U.S. sales in August were up 21 percent over July, market share was up 0.7 points, and dealer inventory was reduced for two consecutive months by 42,000 units, or approximately 10 percent in total.  

“This is the result of working together with our dealer network and we want to thank them for their constant support and engagement,” the company said in a statement. “We meet and talk monthly, have weekly calls and personal conversations at the highest level. This is where such dialogue should take place.”  

Stellantis says it has started a down a new path that will prove successful and that it will “continue to work with our dealers to avoid any public disputes that will delay our ability to deliver results.” 

The letter, which said retailers have been left in an “anemic and diminished state,” immediately got Tavares’ attention, according to a dealer who wished to remain anonymous. Tavares, who happens to be in Detroit now, will have a call with dealer council leadership Thursday to discuss their concerns.
 
This isn’t the first letter dealers have sent to Tavares.

Dealers laid out their needs in a May letter that led to a meeting with Tavares a few days later. Several dealer council executives met with Tavares and North America COO Carlos Zarlenga in Detroit, where they brought up issues such as insufficient allocation of desirable trim levels of certain models. 

Dealers then pressed their case to company executives at a June council meeting in Detroit where they discussed topics such as pricing strategy and incentives. 

The company responded with a national summer incentive campaign that discounted many nameplates by up to $2,000. Stellantis also began allowing dealers to order certain vehicles that they couldn’t get in recent months, including base models of the Grand Cherokee and Wrangler and the more feature-packed Grand Cherokee Limited.

More needs to be done, the dealer said, who added that progress was seen last month. But the dealer said Inventory needs to cleared faster. Stellantis brands have among the highest days’ supply numbers in the industry.

“Last month, we grabbed a little share back,” the dealer said. “It looks like we're tracking [to] grab some additional share back this month… But it’s going to take too many months to get us where we really need to be.”

The dealer said the company has been taking some actions that are counterproductive. 

“A bigger piece to this is when you factor in the number of other things that they have changed that dramatically affect the dealers. The reduction of marketing funds that they would give us for co-op and the many other programs, changing how they paid on customer satisfaction to be tied to shipments and not sales,” the dealer said. “All those things have a detrimental effect on dealer profitability.”

The new letter said the “bill has come due” for the decisions the company made in 2023 to “engineer” its profits. The dealers told Tavares in the letter that the company’s “attempt at a soft landing on the backs of your employees, your dealers, and your suppliers is frankly just wrong.”

Vince Bond Jr. contributed to this report.