Leaders of Stellantis’s (STLA) U.S. dealer network have sharply criticized CEO Carlos Tavares for what they describe as the “rapid degradation” of the automaker’s brands, according to an exclusive Bloomberg report. In a letter dated September 10, the dealers accused Tavares of making short-term decisions that boosted profits and his compensation but ultimately reduced the company’s market share. Furthermore, this resulted in hurting the automobile company’s key brands like Jeep, Ram, Dodge, and Chrysler.
Dealers Argue that Tavares’s Efforts Are Insufficient
Stellantis has been in trouble recently with its earnings in the first half of the year down by nearly 50%. As the company is faced with declining sales in the U.S., Tavares has been cutting jobs and reducing capacity at its factories. While Stellantis has tried to clear its vehicle inventory through price cuts and incentives, dealers argue that these efforts have been insufficient and threaten the company’s market share over the long term.
As a result, the company’s dealers have expressed frustration as they have been warning Tavares for over two years about his disastrous company strategy. In addition, the dealers have pointed out that the company has made insufficient investments in an aging product lineup. This includes the discontinuation of its Jeep Cherokee without an immediate replacement in the midsize SUV segment.
STLA Responds to the Dealers’ Criticism
In response, Stellantis said it disagreed with the criticism for its dealers, noting that a recent plan with dealers had led to sales and market share gains in August. The company emphasized its close communication with the dealer network. However, dealers remain concerned that production cuts will worsen the situation. They have urged Tavares to attend their next council meeting on October 15 to address these issues directly.
Is STLA a Good Stock to Buy?
Analysts remain cautiously optimistic about STLA stock, with a Moderate Buy consensus rating based on 13 Buys, three Holds, and two Sells. Over the past year, STLA has declined by more than 10%, and the average STLA price target of $27.26 implies an upside potential of 82.3% from current levels.
