How things went from bad to worse for Jeep-owner Stellantis

• Stellantis CEO Carlos Tavares is under pressure.
• Tavares is being criticized for cutting too deep as he reshapes the global automaker.
• Investors, dealers, and union workers have all raised issues with Tavares's leadership.

Jeep-owner Stellantis is in turmoil.

In the past year, the global automaker has seen falling sales, shrinking profit margins, and a slew of executive departures. Frustrated dealers, investors, and union workers all appear united on one issue: CEO Carlos Tavares is a problem.

Tavares, well-known in the automotive industry for his corporate frugality, is being criticized for cutting too deep as he reshapes the car company created by a mega-merger of the former Fiat Chrysler Automobiles and France's PSA Groupe in 2021.

Wall Street is disappointed by the global automaker's lackluster financial performance, dealers are frustrated with shrinking lineups, and the United Auto Workers union is on the verge of a strike over lost product commitments.

Criticism of Tavares only got louder after Stellantis issued a profit warning at the end of September, signaling that margins would be smaller than expected this year and that extensive restructuring in North America would result in negative free cash flow.

After months of that mounting pressure — plus an investor lawsuit — Stellantis confirmed that Tavares would retire after his contract expires in early 2026.

Until then, the Portuguese businessman will have to find a way to steer the company through one of the most turbulent moments in its relatively short history.

A Stellantis spokesperson said the investor lawsuit is without merit, and the company plans to "vigorously defend itself." Stellantis is also taking legal action against the UAW, the spokesperson said.

Stellantis dealers are fed up

Dealers for years had privately expressed concerns over the loss of more affordable models at Jeep, Chrysler, and Dodge — cost-cutting moves that helped deliver record profits for Stellantis in 2023.

In September, Tavares publicly lost the support of the US dealer council, which published an open letter accusing him of degrading the value of their brands by discontinuing so many models.

In the letter, signed by dealer council chairman Kevin Farrish, retailers accused Tavares of "reckless short-term decision-making" that has had "devastating, yet entirely predictable, consequences in the US market."

Dave Kelleher, a Chrysler-Dodge-Jeep-Ram dealer in Pennsylvania, told Business Insider that the cuts to Jeep, which lost the affordable Cherokee and Renegade for the 2024 model year, have been especially detrimental.

He's glad that both models are set to return for the 2026 model year but says he's losing customers in the meantime.

"Some bean counters made bad mistakes," Kelleher said, referring to corporate employees. "I just question why we would stop building Cherokees before a new one is prepared?"

Short-term gain, long-term pain

The numbers support Kelleher's gripe.

Stellantis's US sales were down 17% through September compared to a year ago, weighed down by big volume losses at profit-generators Ram and Jeep. Once a market leader, Jeep has ceded the more affordable SUV segments to competitors like Hyundai, sending market share down below 10%.

Jeep, Chrysler, and Dodge also have an oversupply problem, with well over 100 days' supply for each brand at the end of the summer, according to Cox Automotive. That's compared to an industry average of 77 days' supply.

This signals that Stellantis's offerings are out of step with consumer demand. Ivan Drury, an automotive analyst for car-shopping website Edmunds, pointed to price as a barrier for would-be returning customers — once a strength for Jeep in particular.

The average Stellantis vehicle sold for over $56,000 in the second quarter, compared to an industry average of around $45,000 this year, according to industry data.

"If a customer has an older Stellantis product, the odds of buying a new one are very, very diminished, especially compared to the rest of the industry," Drury said. "A lot of that is because the ATP creep is so aggressive."

The discontinuation of more affordable vehicles appears to have broad implications for the company. Vehicle affordability is more important now than it has been for the past several years, as customers tighten purse strings amid inflation and rising interest rates.

And the factories left without products have become a battleground for the UAW.

The UAW threatens a strike

The Illinois factory where Stellantis builds the discontinued Jeep Cherokee is at the center of the UAW's clash with Tavares.

The union has said it is ready to strike if Stellantis doesn't reinstate product commitments for the plant, arguing that backing off investments violates its 2023 contract. Stellantis, in return, has filed a lawsuit accusing the union of violating the contract with its strike authorization votes.

After a historic strike at all three Detroit car companies last fall, the UAW won the right to strike over product commitments. However, Stellantis argues that these commitments are always subject to change with market conditions.

While dealers and investors have taken their chances to question Tavares's leadership, on a sunny October afternoon, a more direct and profane chant rang out in the parking lot of a Stellantis UAW local: "S***-can Carlos."

At a rally organized to pressure Stellantis to maintain job commitments at the Illinois factory where it previously built the Cherokee, UAW President Shawn Fain said it was "once again up to the UAW members to save this company from itself."