What went wrong at Stellantis?

If you have a favorite automotive brand, there's a good chance it's made by Stellantis. Chrysler, Dodge and Jeep all fall under the company's umbrella, as do international lines like Fiat, Maserati and Alfa Romeo. But Stellantis is stumbling.

How bad is it? CEO Carlos Tavares resigned this month, said Fortune. That was a shock: Tavares was "once hailed as the very best manager the legacy car industry had to offer." Stellantis posted "record annual results" for 2023, but in September Tavares "shocked the market" this fall by revealing Stellantis' plans to "liquidate a bloated U.S. inventory of vehicles at bargain-basement prices." Critics said the announcement revealed that Tavares "prioritized short-term success at the cost of longer-term problems," Fortune said.

"All kinds of problems lurked" behind Stellantis' 2023 success, said CNBC. High prices and quality problems, notably in the ever-more-costly Jeep line, dogged the company's brands. As a result, "profits plummeted by nearly half" during the first six months of 2024, and U.S. sales fell 20% in the third quarter. (Industry sales are up overall.) Dealers now find themselves with a surplus of Stellantis vehicles on their lots. "That means they aren't selling," said CNBC. The company's North American brands, once a "cash cow," are faltering. "The next six to 12 months could also be quite rocky."

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

What did the commentators say?

"What a mess it is," Gus Carlson said for The Globe and Mail. Jeep, Dodge and Ram were once "workhorse" brands, but they have increasingly "turned away loyal buyers" with "stubbornly high luxury-level prices." Tavares was once seen as a "visionary dealmaker" for his maneuvering that combined the Peugeot and Fiat Chrysler companies to create Stellantis. But he made a misstep when it came to a basic rule of business: "Know what value means to your customers and price your products accordingly." Instead, the visionary dealmaker ended his tenure in a blaze of "tone-deaf strategy and bad leadership," said Carlson.

The problem at Stellantis "boils down to product and price" Steven Cole Smith said at Hagerty, which covers the auto industry. The company needs to find a surprise in its product pipeline to "instill confidence in the dealer network, and generate a positive buzz among customers." The company's North American forerunner, Chrysler, has been left for dead repeatedly over the decades, only to emerge with hit products like minivans in the 1980s and the Dodge Ram pickup in the 1990s. "Each represented outside-the-box thinking," said Smith, "backed by the willingness to take chances."

What next?

The dealers who sell Stellantis vehicles are "breathing a sigh of relief" at Tavares' departure, said The Detroit Free Press. And they're optimistic about the company's future. "It's like buying a house, it's got great bones," said an anonymous Michigan dealer. But they still have to move slow-selling vehicles off their lots, and price remains an issue. There are more than 100,000 Jeep Grand Wagoneers sitting unsold at the moment — but the vehicle "carries a price tag over $100,000," said the Free Press. Which means there's still trouble in the short term. If you're going to bet on Stellantis' future, another dealer said, "you wouldn't bet it on a $113,000 product, you'd bet it on a $30,000 product."