Stellantis CEO says company is on pace to fix sales problems after poor performance this year

DETROIT — (AP) — Stellantis is fixing its slowing U.S. sales at the right pace after fumbling a marketing plan earlier this year, CEO Carlos Tavares told reporters Monday.

Tavares, who last week pushed out the company'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. The board last month confirmed that it's searching for a successor.

Stellantis, formed from the 2021 merger of France's PSA Peugeot and Fiat Chrysler Automobiles, has struggled this year in both Europe and the U.S.

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 U.S., long the company's cash cow. In the second quarter, the company came up with a new marketing plan with incentives to counter high sticker prices. But it didn't attract enough buyers. Sales fell 20%, and they're down over 17% for the first nine months of the year. The rest of the auto industry saw sales increase 1% from January through September.

In June, U.S. dealer inventory ballooned to just over 430,000 vehicles.

But 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.

Tavares said he also should get credit for successfully merging the companies as well as 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.”

Struggles in Europe and the U.S. pushed first-half net profits down 48% compared with the same period last year. That led Stellantis to slash full-year financial forecasts. It now expects to end the year with negative cash flow of 5 billion euros to 10 billion euros ($5.6 billion to $11.2 billion) instead of positive.

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 U.S. is threatening strikes at several plants, alleging that Stellantis isn't keeping commitments to build vehicles.

Chief among the issues is a company promise in the UAW's contract to reopen a factory in Belvidere, Illinois, as well as build a parts warehouse and a new electric vehicle battery plant in the city.

In a letter attached to the contract, Stellantis agreed to build new gas and electric midsize pickups in Belvidere starting in 2027.

UAW President Shawn Fain contends Stellantis wants to delay reopening the plant until after the contract expires in 2028, when it would no longer be legally obligated to reopen it. He's also upset at reports that Stellantis plans to move production of the Dodge Durango SUV from Detroit to Canada.

“It is gross mismanagement by top executives that is killing this company," Fain said in a statement.

The company denied that it plans to move the SUV, and it says Belvidere has been delayed due to market conditions, not canceled. Stellantis says there’s language in a letter attached to the contract saying plant investments must be approved by the company and may not happen if market conditions change.

Multiple local union offices have filed grievances over the changes, and Stellantis has sued asking for monetary damages should the union go on strike.

Ivan Drury, director of insights at Edmunds, said Stellantis for years has lacked affordable models that many buyers in the U.S. 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 U.S. 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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