UAW, U.S. dealers increase criticism of Stellantis CEO over cuts, sales declines

DETROIT – Stellantis‘ U.S. dealer network has joined the United Auto Workers union in criticizing CEO Carlos Tavares for the company’s recent sales declines, factory production cuts and other decisions they deem detrimental to the automaker’s business.

In an open letter to Tavares this week, the head of Stellantis’ U.S. dealer council, Kevin Farrish, condemned the chief executive for prioritizing the company’s profits at the cost of sales, market share and the reputations of its Chrysler, Dodge, Jeep and Ram brands. The council represents the company’s 2,600 U.S. dealers.

“The market share of your brands has been slashed nearly in half, Stellantis stock price is tumbling, plants are closing, layoffs are rampant, and key executives fleeing the company. Investor lawsuits, supplier lawsuits, strikes–the fallout is mounting. Your own distribution network, your dealer body, has been left in an anemic and diminished state,” Farrish wrote in the Tuesday letter, which Bloomberg first reported Wednesday night.

Farrish, a dealer in Virginia, said the dealer council has raised concerns about the company’s operations for two years, and accused Tavares of “reckless short-term decision making” that boosted profits and padded his compensation but have led to the “rapid degradation” of its brands, he wrote.

Stellantis, in a statement Wednesday night, said it takes “absolute exception to the letter,” citing a 21% increase in August sales over July and an “action plan developed with the dealer body.”

“At Stellantis, we don’t believe that public personal attacks, such as the one in the open letter from the NDC president against our CEO, are the most effective way to solve problems,” the company said. “We have started a path that will prove successful. We will continue to work with our dealers to avoid any public disputes that will delay our ability to deliver results.”

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

Shares of Stellantis are off roughly 36% this year to around $15. The stock hit a new 52-week low Thursday of $14.76 per share.

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

The cost-saving measures have included reshaping the company’s supply chain and operations as well as headcount reductions and cutting vehicle production at plants.

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

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

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

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

Stellantis’ performance compares to the overall U.S. new light-duty vehicle sales market, which increased 13% last year, according to federal data.