Dealers and UAW criticize Stellantis CEO for cuts and falling sales

DETROIT – StellantisThe US dealer network has joined the United Auto Workers union in criticising CEO Carlos Tavares for the company's recent sales declines, factory production cuts and other decisions it says are damaging to the carmaker's business.

In an open letter to Tavares this week, Stellantis U.S. Dealer Council Chairman Kevin Farrish condemned the CEO for prioritizing the company’s profits at the expense of sales, market share and the reputation of its Chrysler, Dodge, Jeep and Ram brands. The council represents the company’s 2,600 U.S. dealers.

“Its brands' market share has been cut nearly in half, Stellantis' stock price is plummeting, plants are closing, layoffs are rampant and key executives are leaving the company. Investor lawsuits, supplier lawsuits, strikes — the consequences are mounting. Its own distribution network, its dealer corps, has been left anemic and diminished,” Farrish wrote in the Tuesday letter, which Bloomberg first reported Wednesday night.

Farrish, a Virginia dealer, said the dealer council has expressed concerns about the company's operations for two years and accused Tavares of “making reckless, short-term decisions” that boosted profits and increased his compensation but led to a “rapid degradation” of his brands, he wrote.

Stellantis, in a statement late Wednesday, said it was “in absolute exception to the letter,” citing a 21% increase in August sales over July and an “action plan developed with the group of dealers.”

“At Stellantis, we do not believe that public personal attacks, such as the one made in the NDC Chairman's open letter against our CEO, are the most effective way to resolve issues,” the company said. “We have embarked on a path that will prove successful. We will continue to work with our distributors to avoid any public disputes that delay our ability to deliver results.”

Stellantis reported a record profit in 2023, but so far this year, the carmaker reported a first-half net profit of 5.6 billion euros ($6.07 billion), down 48% from the same period in 2023.

Stellantis shares are down about 36% this year, to $15. On Thursday, the stock hit a new 52-week low of $14.76 per share.

Tavares has been on a cost-cutting and profit-driven mission since the company was formed through a merger between Fiat Chrysler and France’s PSA Group in January 2021. It’s part of his “Dare Forward 2030” plan to boost profits and double revenue to 300 billion euros ($325 billion) by 2030.

Cost-saving measures have included restructuring the company's supply chain and operations, as well as staff reductions and cuts in vehicle production at plants.

Several Stellantis executives described the earlier cuts to CNBC as difficult but effective. Others, who spoke on condition of anonymity because of potential repercussions, said they were grueling to the point of being excessive.

UAW President Shawn Fain has also publicly criticized Tavares, including in a speech last month at the Democratic National Convention. He has accused Tavares of defrauding consumers and failing to honor parts of the union’s labor contract with the automaker.

The UAW, which represents about 38,000 Stellantis employees, will hold a rally Thursday afternoon at a union hall near Stellantis' Warren Truck Assembly Plant in suburban Detroit to “condemn gross mismanagement” at the company, according to an email.

U.S. sales for Stellantis, formerly Fiat Chrysler, have declined each year since a recent peak of 2.2 million in 2018. The company sold more than 1.5 million vehicles last year, a decline of about 1% from 2022, when it reported a significant 13% drop compared with the previous year.

Stellantis' performance is comparable to the overall U.S. new light-vehicle sales market, which rose 13% last year, according to federal data.