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Stellantis is addressing a significant sales slump in the U.S. market after a poor marketing strategy earlier this year. CEO Carlos Tavares, who recently led a major management overhaul, acknowledged the company’s struggles in both the U.S. and Europe.
CEO Carlos Taveras takes the full responsibility for the recent setbacks faced by the company. | Image Credit: Freepik
Key Highlights
- Stellantis faces a 20% drop in U.S. sales and is working to reduce inventory by year-end.
- Outdated product lines and a lack of affordable models are hurting the automaker’s appeal to consumers.
- The company is struggling to balance EV development with current market demands in both the U.S. and Europe.
New Delhi: Stellantis, the global automaker formed from the merger of PSA Peugeot and Fiat Chrysler Automobiles in 2021, is facing a steep decline in U.S. sales and operational challenges across its markets. After an unsuccessful marketing strategy and inventory management issues, CEO Carlos Tavares has vowed to fix the company’s performance with renewed urgency, aiming to reverse a 20% drop in third-quarter U.S. sales and a 17% decline over the first nine months of 2023.
Speaking at the Paris Motor Show, Tavares took full responsibility for the company’s recent setbacks, while also defending his achievements, such as merging the companies and turning around the fortunes of Peugeot and Opel. With his retirement set for 2026, Tavares emphasised that Stellantis must adapt to survive in this “Darwinian period,” where competition is fierce, and both production and sales strategies are under scrutiny.
Struggles in the U.S. Market
In the U.S., Stellantis is contending with high vehicle inventories, reflecting broader market issues. Dealer inventory reached over 430,000 vehicles in June, but the company has made some progress, reducing this number by 52,000. However, many dealers still report an oversupply of certain models, particularly at a time when demand for expensive, large vehicles has softened. David Kelleher, a Stellantis dealer near Philadelphia, noted that he now sells fewer new vehicles and relies heavily on used car sales to compensate for the drop in transactions.
Kelleher pointed out a shift in consumer preferences, highlighting that Stellantis’ focus on electric vehicles (EVs) might be premature given the current state of the U.S. charging infrastructure. He believes Stellantis should prioritise gas-powered and hybrid vehicles that are in higher demand, postponing further EV production until the market is better equipped to support it.
Challenges in Europe and the EV Market
The situation is similarly challenging in Europe, where Stellantis is navigating shrinking government subsidies for EVs and facing stiff competition from Chinese automakers. The company is under pressure to accelerate the shift to EVs to meet European Union emissions goals, targeting a 55% reduction in greenhouse gas emissions by 2030. However, Chinese automakers’ competitive pricing, coupled with the planned EU tariffs on Chinese EV imports, has added complexity to Stellantis’ European strategy.
Stellantis’ outdated product lineup is also an issue, with many of its key models, like the Ram pickup, only receiving minor updates in recent years. The lack of affordable options in its U.S. portfolio is another problem, as many consumers are now seeking practical and cost-effective vehicles in the face of high interest rates and economic uncertainty.
A Long Road to Recovery
While Stellantis plans to reduce inventory to below 350,000 vehicles by Christmas and aims to start 2024 on better footing, industry experts suggest the road to recovery will be long. Ivan Drury, Director of Insights at Edmunds, pointed out that the company has few affordable models, leaving it out of sync with consumer demand. Vehicles like the Jeep Compass are priced significantly higher than competitors, limiting Stellantis’ appeal in key segments.
With Stellantis vehicles currently sitting on dealer lots for an average of 100 days—twice the industry average—Tavares’ leadership will need to focus on addressing the root issues of pricing, product relevance, and consumer satisfaction. However, experts like Sam Abuelsamid of Guidehouse Insights suggest that without drastic incentives or price cuts, the company may continue to struggle in the short term.
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