Stellantis faces multiple challenges amid falling sales and labor tensions

Stellantis faces multiple challenges amid falling sales and labor tensions

Stellantis, a major player in the automotive industry with a portfolio of well-known brands such as Chrysler, Fiat, Jeep, Peugeot and Ram, is facing a number of significant obstacles.

The company has seen a worrying decline in both sales and profits. Retailers have increasingly expressed their frustration over the excess of unsold inventory, directing their disappointment at both Stellantis and its CEO, who have faced harsh criticism for the situation. Additionally, the company’s stock value has nearly halved since reaching its peak in March.

This Monday, Stellantis announced that its annual profits will likely be lower than previously expected, primarily due to costs associated with rectifying underperforming segments in the US market. It now expects operating profit to be no more than 7% of revenue, a decline of more than 10% from the initial forecast. This revision caused Stellantis shares to drop by around 14% on European markets.

To further complicate matters, the United Auto Workers (UAW), which represents the workforce at the company’s US plants, has expressed concern about potential job cuts, with plans to vote soon on strike action in various Stellantis production sites.

These developments have sparked widespread speculation about the future leadership of Carlos Tavares, CEO of Stellantis, known for his passion for racing cars. Since taking over at PSA in 2014, Tavares has expanded the business through acquisitions, surpassing General Motors in vehicle sales last year. However, with his contract expiring in early 2026, the company has begun evaluating potential candidates for his succession.

Stellantis, born from the 2021 merger between PSA and Fiat Chrysler, is headquartered in Amsterdam. Although they are based in Europe, its US operations contribute significantly to its profits, accounting for more than half of it in the first half of 2024 alone. This makes the challenges in the US particularly impactful for the company’s global operations.

Industry experts are closely monitoring these developments. Erin Keating, senior director of Cox Automotive, highlighted Tavares’ precarious position amid these challenges. In the U.S. market, Stellantis brands like Jeep have raised prices more significantly than competitors in recent years and have been slower to offer discounts as demand has fallen. High interest rates have exacerbated the problem, making new models less accessible to consumers looking to upgrade older vehicles like the Jeep Wagoneer or Dodge Charger.

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