Stellantis 'fear factor' dominates behind-the-scenes strategy talks
Dealers battle 'lot rot' as they struggle to sell Jeep, Ram vehicles
Stellantis executives are working frantically behind the scenes, calling and asking car dealers nationwide, “How do we get things going again?” since the abrupt resignation of CEO Carlos Tavares after 12 months of dramatic decline.
“We need urgency. That’s the one fear factor we have. How fast can they fix this?” said a Jeep dealer who talks daily with a network that sells Stellantis vehicles in Michigan, Indiana, Ohio and Florida. “Everything takes time. Momentum is glorious when you have it and when you lose it, it takes forever to get back. We need sales.”
He and others who sell Jeep, Ram, Dodge and Chrysler vehicles asked that their names not be used in order to protect their relationships with the company. They spoke to me because they wanted to help the public and investors understand the very serious challenges — they and others blame on Tavares— that have crippled the company financially.
“This year has been a debacle. Literally, bleeding market share left and right. The supply of inventory on our lots is ridiculous. Dealers are drowning in expenses. We finance the vehicles and have to pay interest on the vehicles to the bank,” the Jeep dealer said. “Not only are they not moving, then you get ‘lot rot’ and batteries start going dead. And this one gets a dent in it. It’s never ending so you keep throwing money at inventory that’s not moving.”
Replacing batteries can be a huge cost for dealers when vehicles sit, unsold, on a car lot. The battery cost can range from $400 to $600 per vehicle, and the dealers “fight” the company for reimbursement, they said.
“We have a very large portion of our inventory that has those issues because these cars aren’t moving,” a Ram dealer told me.
Stellantis was originally covering battery costs under warranty but costs ballooned and Stellantis changed the rules, dealers told me. The automaker now requires dealers to charge vehicles once a month in an attempt to prevent degradation, and then provide proof that it was done.
“That’s fantasyland,” the Jeep dealer told me. “We can’t even afford the employees we have because you guys got us drowning in expenses and not selling cars you want us to hire more people to go out there and charge batteries once a month? Well, that’s the only way you’ll get paid under warranty.”
Employees have left to work for competitors as sales have sunk through 2024, the year following a $39.5 million performance-based bonus to the former top executive.
This is just one of many behind-the-scenes challenges facing Stellantis and its dealers. While dead batteries on car lots may seem insignificant, it illustrates an insidious pattern of corporate cost cuts that lead to overall disruption.
I asked dealers what kinds of things, specifically, the Stellantis board of directors should know is happening out in the field as they decide who to tap to lead the company out of this troubled period.
Jeep and Ram vs. BMW and Mercedes
Tavares, who was reviled by hourly workers, salaried workers, suppliers, union leaders, car dealers and investors in his final months on the job, abruptly quit the job. Publicly and privately, just about everyone associated with the company urged the board of directors to fire the CEO hired in January 2021.
The automaker announced acceptance of his resignation on Sunday, Dec. 1, 2024.
Now, behind the scenes, executives at Stellantis in the U.S. are frantically holding calls with every group associated with the company, including car dealers, they said.
“It’s all different since Tavares took over. He completely screwed up the entire business model, particularly in the United States. He got very greedy. He raised prices by 40% and slashes rebates at the same time. He wanted to make us upscale, a premium brand like BMW and Mercedes. He wanted Jeep to be in that conversation. He wanted Jeep and Wagoneer to be in that conversation. But that’s not who we are in this country. We have 100 years of heritage and the brand is iconic. Now our (sales) numbers are embarrassing.”
The 2025 Jeep Grand Wagoneer ranges in price from $93,945 to $116,190, not including taxes and delivery fees.
Stellantis dealers in the Detroit metro area have gone from selling 8,000 vehicles a month to, I think last month, not even 3,000, they said.
CNBC called the latest sales figures a “free fall,” dropping nearly 20% in the third quarter that runs from July through September, compared to a year earlier.
By contrast, General Motors sales dropped 2% and Ford Motor Co. increased nearly 1% during the same period in 2024.
Hidden, complicated deals
Stellantis dealers say they’ve wondered if some decisions made by Tavares weren’t meant to hold up the stock price. Car companies report average incentives provided to car buyers as well as average transaction cost.
Stellantis slashed its rebates and incentives for consumers yet continued to offer some hidden deals if shoppers went into dealerships to, in the words of a Great Lakes dealer, “get creative” and not worry about car color or other details.
For example, if a shopper goes online to buy a Ram Truck or Jeep, they don’t find the deals they want or need, dealers said. Consumers would need to go into the dealership to find out what might be cobbled together financially, dealers said.
“Everybody is looking online first. This just makes no sense,” said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions in Chester Springs, Penn. “I’m not going to go into a dealership to find out what they’ll offer me when others will tell me what they offer online.”
Stellantis dealerships said they have been putting more vehicles into the rotation to qualify for special incentives from Stellantis. But most buyers don’t know about this unusual opportunity and dealers get frustrated trying to figure out ways to get incentives that buyers expect.
“We can get rebates that are hidden from the customer right now,” a Ram dealer told me. “It’s complicated for everybody. Traditionally, you’d promote deals to customers. Now it’s way more complex. It seems like they’ve been trying to manipulate rebates so they don’t impact the stock price.”
Buyers can negotiate cheaper prices on new vehicles if they’re used as rentals by the dealership — for 30 days and 500 miles.
That’s the secret recipe, dealers said.
“All the stars have got to line up,” the Midwest dealer explained. “Prices are way too high and we have to jump through all these hoops to get close to competitive. We put cars into a rental fleet and loan out to people who are waiting for an oil change or recall service. It’s a rental under warranty, and you can get $1,000 to $5,000 off the sales price, depending on the model.”
Different dynamics misunderstood
Meanwhile, dealers have paid a set price for cars new and they’re paying interest on unsold vehicles and they’re bleeding costs, too, they said.
Stellantis executives in the U.S. and Europe have been warring internally, sources within the company have revealed to me.
Complicating matters is that fact that every part of the U.S. is different and failure of Stellantis corporate officers based in Europe to understand this reality directly impacts the bottom line.
So, Detroit is an island of its own. It’s the most unique market in the country by far and a major revenue machine for Stellantis. While some 20% of car shoppers may lease a vehicle nationally, that number may shoot past 75% in Detroit, car dealers said.
“It’s a totally different dynamic here. We did a really good job back in the day of promoting leasing well before the rest of the country grasped it, getting the same car for lower payments. It’s on automatic pilot now,” said a Michigan dealer. “So you can get vehicles moving in Detroit. You put up a lease program and, because people here are payment driven, you can move vehicles. But, right now, Stellantis doesn’t have a clue. They need American leaders who understand the market.
He added, “Detroit is essential … Detroit leases a huge percentage of the volume — Jeep Compass, Jeep Grand Cherokee, Ram 1500. When they have an issue with something that maybe isn’t moving, they can go to Detroit, put in a lease program, and keep the plant going. It’s unique.”
Tavares didn’t understand the U.S., and treated it like a monolithic buyer, dealers said.
“Texas likes to buy trucks. Detroit likes to lease trucks. New York likes to lease trucks, The East and West Coasts loves hybrids and electric vehicles,” a Jeep dealer said “They need to loosen the pursestrings and give the market the money it needs to meet the pricing proposition. Right now, the pricing is too high for the customer’s value perception. The only way to fix that is to come to the table with the money. Tavares didn’t want to do that. We’ll see what they do now.”
An executive at a Stellantis competitor told me, “You have profit pillars in Ram and Jeep and, I just wonder, ‘Why are you letting market share go away? Why are you letting inventory swell?’”
Repairing the situation is mission critical
Stellantis is consulting dealers because they’re the first line of defense.
“We've lost too much market share already nationally to sustain the dealer network. When dealers are having a hard time being profitable, everything gets cut -- support to the community, advertising, charitable decisions. It's a trickle down,” the Midwest dealer said.
Advertising has plummeted, hitting radio, TV and print media hard.
“Tavares shrunk head count of the company, production, sales, incentives, dealer relationships with the manufacturer disappeared,” a Jeep dealer said. “You have to find a dealer that's creative and figures out how to maneuver this chaos. It’s complex.”
Now, repairing the Stellantis mess stateside is critical.
Stellantis has seen the U.S. as a profit center, selling fewer vehicles than Europe but generating higher profits, noted longtime industry analyst John McElroy, host of the “Autoline After Hours” webcast and podcast. “Globally, the Chrysler Group dwarfs what Peugeot and Fiat contribute. This is the Golden Goose. This is 60% of the profits, largely from Ram and Jeep. Dodge has done a brilliant job with Charger and Challenger.”
At the same time, competitors have been on the warpath.
“Ford finally woke up and went, ‘Holy shit, look how much money they’re making at Jeep.’ And they came out with Bronco and it’s been a huge profit contributor to the company,” McElroy said. “Everybody is gunning for Jeep right now.”
Meanwhile, how does a company allow a 100-day supply of Ram pickups on the car lots? The rule of thumb is 60 days, he said. “Automakers book a vehicle as sold as soon as it leaves the assembly plant. So, if you keep building vehicles, you report them as being sold, your earnings look great. And then you force them down the dealers' throats. But they wouldn't incentivize them and inventory ballooned out of control.”
Tavares wanted “mega” profit margins and the whole strategy crumbled, McElroy said.
Now car dealers say privately that they’re optimistic things will turn-around at the troubled company, but behind the scenes everyone is holding their breath waiting to find out who will be named the new CEO.
They’re hopeful and optimistic because things can only improve, they said.
“The dealers are, like, ‘This is the best Christmas gift ever,’” said a Jeep dealer, who reflected a discussion among a dozen Jeep dealers. “Right now, everything is still the same, though. It’s a shit-show. It’s corporate America.”
He added, “As a dealer body, we’re very excited about new leadership. We believe Tavares was the sole issue, particularly related to U.S. pricing, programs and strategy. He is now out of the way. The rumor of who they’re replacing him with, the people that we know of, which I can’t name, understand the U.S. much more than he did. ”
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You are truly a "car woman"! Anyone who can pull "lot rot" out of their vast car vocabulary, has got to be crowned a "car women"!
Great reporting Phoebe! In the 1990's and early 2000's I owned a couple of Chevy pickup WT's. the history i am seeing isn't matching what I know--because I owned those trucks when sources say they didn't exist. They were fantastic. Always white with nothing fancy. Bare bones. Reasonably priced. Vinal floors. Old fashioned roll up windows. To me Ram trucks are gaudy and over-engineered, with enough metal to plate a battleship. Many of us need reasonably priced vehicles, and I don't see them--not that I look out for them. As you likely remember, my current Chevy pickup truck was made in 2000.