Over the past few months, the parent company behind one of Detroit's most beloved car brands, the multinational automaker Stellantis (STLA) , has taken a dark path as it navigated a dark hole.
During its first half 2024 earnings call back in July, the chief executive behind American nameplates like Jeep, Dodge, Chrysler, and Ram Trucks reported that the firm had "significant work to do" to propel itself forward, giving an ultimatum to any of its 14 brands that drag them down.
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"If they don't make money, we'll shut them down," he said. "We cannot afford to have brands that do not make money."
Since then, the automaker has pursued major cost-cutting measures, shifted around its C-suite, laid off many of its American factory workers, and begun to address its major inventory problems.
However, a recent announcement may signal that some relief is on the way, though it still has a journey to embark on.
Au revoir, Carlos Tavares
On Dec. 1, Stellantis announced that its board of directors accepted the resignation of its CEO, Carlos Tavares, effective immediately.
In a statement embedded in the announcement, Stellantis Senior Independent Director Henri de Castries hinted that a rift had emerged between Tavares and other Stellantis executives, shifting from what he called a "perfect alignment."
"Stellantis’ success since its creation has been rooted in a perfect alignment between the reference shareholders, the Board and the CEO," de Castries said. "However, in recent weeks different views have emerged which have resulted in the Board and the CEO coming to today’s decision."
A source who spoke to Reuters indicated that the tensions rose as the Stellantis board of directors felt that Tavares was moving too quickly to identify and find profit; overly focusing on short-term solutions that would patch up his reputation at the expense of the health of the automaker as a whole.
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A tall order for Stellantis' next CEO
Tavares' resignation came shortly after the automaker announced that he would retire when his contract was supposed to expire in early 2026. Resignation or no resignation, the Stellantis board has been looking for a new chief executive for quite some time.
In September, Bloomberg reported that a team of executives led by Stellantis Chairman John Elkann had begun a search for Tavares' potential successor, which the automaker did confirm.
In a statement at the time, a Stellantis spokesperson said it is "normal" for board members to consider the automaker's succession planning, considering the CEO's important role in the company.
Related: Stellantis seeks new CEO amidst fervent auto industry pressure
Stellantis' next CEO has huge inventory problem to solve
In a statement to Reuters, Stellantis dealer owner Jeff Laethem said that he welcomed Tavares' resignation, noting that the situation he was facing "couldn't get worse" under his leadership.
Previously, dealers like him chastised the CEO for what they called the “rapid degradation” of beloved auto brands like Dodge, Ram, and Jeep. In an open letter dated Sept. 10, leaders representing the U.S. dealer network of Stellantis brands asked for financial support to help clear excess and old inventory off their lots.
Additionally, the dealers accused Tavares of prioritizing short-term decisions that boosted profits at the expense of shrinking Stellantis's market share and hurting its American marques — Jeep, Ram, Dodge, and Chrysler.
“For over two years now, the U.S. Stellantis National Dealer Council has been sounding this alarm to your US executive team, warning them that the course you had set for Stellantis was going to be a disaster in the long run,” the dealers wrote.
“A disaster not just for us, but for everyone involved — and now that disaster has arrived.”
Related: Stellantis's woes may be a valuable opportunity for new car buyers
To combat this disaster, Stellantis CFO Doug Ostermann noted last month that it has implemented an aggressive incentive campaign to solve its excess inventory crisis.
In a conference call with analysts, Ostermann said that he is directly working with dealers to determine the best approach to selling cars and getting buyers into showrooms, noting that new "customer-facing" incentives and discounts have been applied on key models like the Jeep Renegade to help move inventory.
Currently, on Jeep's website, the 2024 model-year Gladiator pickup price has been lowered by 10% from $37,895 to $34,106, while other models in other brands have aggressive incentives for leasing and financing new cars.
Related: Jeep has a major problem that its factory workers will pay for
The next CEO also faces a big labor problem
Fighting the inventory bloat comes with consequences that will be felt by some of the most vulnerable people on the multinational automaker's payroll: its factory workers.
In a statement seen by The Detroit News, United Auto Workers (UAW) President Shawn Fain welcomed Tavares' resignation, calling it a "major step in the right direction for a company that has been mismanaged and a workforce that has been mistreated for too long."
"Tavares is leaving behind a mess of painful layoffs and overpriced vehicles sitting on dealership lots," Fain said. "We look forward to new Stellantis leadership that respects hardworking UAW members and is ready to keep its promise to America by investing in the people who build its products."
Before Tavares' departure, the autoworkers' union has been in a legal scuffle with Stellantis.
Stellantis revealed on Oct. 7 that it filed eight additional lawsuits against the UAW and 23 local chapters on Oct. 4, just a day after it filed a suit against the UAW and UAW Local 230, which represents the Los Angeles Parts Distribution Center, on Oct. 3 in response to the Local taking a strike authorization vote over grievances laid out in its landmark 2023 contract.
Related: Jeep, Dodge workers' morale takes a big hit
However, more recently, the employment protections that UAW members gained from its contract have not helped heal the wounds that union factory members face.
In a scathing report by The Detroit Times, Stellantis' cuts of more than 3,750 workers at its domestic operations have left a climate of doom and gloom amidst factory workers at its facilities across metro Detroit and Toledo, Ohio.
Though Jeep's Gladiator has been offered at a discount to reduce inventory, the inventory problems that the company is responsible for have let loyal workers down. In early November, Stellantis said that 1,139 workers at its Toledo Assembly Complex in Ohio would face indefinite layoffs as soon as Jan. 5, as a result of the inventory glut.
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