Stellantis Fires Back at U.S. Dealers, Denounces “Public Personal Attacks” Amidst Sales Slump
Stellantis NV, the multinational automotive conglomerate, has issued a scathing rebuke of a recent open letter penned by the president of the U.S. Stellantis National Dealer Council (NDC), Kevin Farrish. The letter, which was addressed to Stellantis CEO Carlos Tavares, accused the company of making “short-term decision-making” that has led to declining market share and brand damage. In response, Stellantis has characterized the letter as a “public personal attack” and has asserted that it takes “absolute exception” to its contents.
Key Takeaways:
- Dealers Criticize Stellantis Leadership: The NDC president’s open letter accuses Stellantis CEO Carlos Tavares of prioritizing short-term gains over long-term brand health. This accusation is fueled by the company’s recent struggles in the U.S. market, reflected in a significant drop in market share and sales numbers.
- Stellantis Defends Its Actions: The automotive giant refutes the claims made by the dealer council, highlighting recent efforts to address the sales decline. The company points to improved July and August sales figures and a reduction in dealer inventory as evidence of its proactive approach.
- Public Feud Highlights Industry Tensions: This public spat between Stellantis and its U.S. dealer network underscores the growing tensions within the automotive industry as it navigates the transition to electric vehicles (EVs) and faces consumer demand challenges.
A Public Row Erupts: What Led to the Open Letter?
The open letter from Kevin Farrish, the president of the U.S. Stellantis National Dealer Council, represents the culmination of mounting frustrations amongst U.S. dealers. The letter explicitly highlights the dealer network’s concerns about Stellantis’s direction, citing declining market share and brand damage as evidence. Farrish claims that the dealer council has been raising these concerns with Stellantis’s U.S. executive team for over two years, but their warnings have been disregarded.
“[A] disaster not just for us, but for everyone involved — and now that disaster has arrived,” the letter stated, referencing the company’s recent struggles in the U.S. market.
Stellantis Responds, Pushing Back Against Dealer Criticisms
In its statement, Stellantis countered the dealer council’s accusations, asserting that the company has taken action to rectify the situation. The company highlighted the “action plan,” developed in conjunction with its dealership network, which has already shown positive results.
“Last month, we introduced an action plan developed with the dealer body that has already shown results. August sales were up 21% over July, market share was up 0.7 points, and dealer inventory was reduced for two consecutive months by 42,000 units or approximately 10% in total,” Stellantis stated.
The company also expressed its disapproval of the “public personal attack” levied against CEO Tavares, arguing that such a tactic is an unproductive way to resolve conflicts. Stellantis maintains that it engages in regular dialogue with its dealer network and that any issues should be addressed through these channels.
A Troubled Trajectory: Stellantis Navigates a Challenging Industry Landscape
The dealer council’s concerns about Stellantis’s performance are not without merit. In the first half of 2024, the company reported a 48% drop in net profit to €5.6 billion ($6.22 billion), accompanied by a 14% decline in net revenue to €85 billion. These figures are largely attributed to a dip in market share in North America, which has been a major focus for Stellantis.
“It is an understatement to say that H1 2024 results were disappointing and humbling,” acknowledged CEO Tavares during the company’s earnings call last month. He cited a challenging industry context and internal operational issues as contributing factors to the shortfall.
This public spat between Stellantis and its dealer network comes at a critical juncture for the global automotive industry. The transition to electric vehicles, coupled with fluctuating consumer demand, has created a turbulent landscape. This has amplified the need for robust collaboration between automakers and their dealerships to navigate the evolving market dynamics successfully. While Stellantis has taken steps to enhance its EV portfolio, the recent public feud with its U.S. dealers underscores the challenges the company faces in maintaining its position in the highly competitive North American market.
Looking Ahead: Stellantis’s U.S. Strategy as a Crucible for Industry Change
As the automotive industry continues to grapple with the ramifications of the EV revolution, the Stellantis-dealer confrontation offers a glimpse into the complex dynamics at play. The company’s response, characterized by a focus on operational enhancements and ongoing communication with its dealer network, reflects a potential path forward.
However, this public feud highlights the necessity for automakers to foster productive partnerships with their dealers, ensuring that both parties have a vested interest in driving success. The challenges facing Stellantis in the U.S. market are not unique; many other automakers are facing similar pressures. As the automotive industry undergoes its transformative journey, the lessons learned from this situation could shape the future of automaker-dealer relationships, ultimately impacting the industry’s ability to navigate this era of change effectively.
