DETROIT — Stellantis is navigating through challenges with its declining sales in the United States, following an ineffective marketing strategy implemented earlier in the year, according to CEO Carlos Tavares, who spoke to reporters at the Paris Motor Show. Tavares, who recently reorganized the company’s leadership by dismissing the chief financial officer and the chief operating officers for North America and Europe, acknowledged his accountability for both the setbacks and achievements within the company. 
 

“I must own the responsibility for the outcomes; otherwise I should seek a different role,” Tavares stated, affirming his intention to retire when his current contract concludes in 2026. The board has already begun the search for his successor. Since its formation in 2021 through the merger of PSA Peugeot and Fiat Chrysler Automobiles, Stellantis has faced difficulties in both European and North American markets. 
 

In the European Union, the company is contending with reductions in government incentives for electric vehicles and increasing competition from Chinese firms, as it works towards a target of a 55% reduction in greenhouse gas emissions by 2030. The EU is also introducing tariffs on Chinese electric vehicle imports. Meanwhile, U.S. sales, a critical revenue stream for Stellantis, have dropped for most of the year. A new marketing strategy that included incentives was launched in the second quarter, but it failed to attract sufficient buyers, resulting in a 20% decline in sales, and over a 17% drop for the first nine months. In contrast, the broader auto industry experienced a 1% increase in sales during the same period. 
 

As of June, U.S. dealer inventories spiked to over 430,000 vehicles. However, Tavares noted that this figure has since reduced by 52,000 in recent months, and the company aims to decrease inventory to below 350,000 by Christmas, signaling a fresh beginning for the upcoming year. He expressed optimism that the newly formed leadership team would enhance profitability and improve customer satisfaction. 
 

Tavares also took credit for the successful merger of the two companies and the profitability of Peugeot and Opel over the past decade. He characterized the current climate as a “Darwinian period,” noting that all options are under consideration, including potential plant closures and brand discontinuations, highlighting the critical nature of the situation. 
 

The challenges in both Europe and the U.S. have contributed to a 48% decrease in net profits during the first half of the year compared to the same timeframe last year, prompting Stellantis to revise its financial outlook for the year. The company now anticipates a negative cash flow of 5-10 billion euros ($5.6 billion to $11.2 billion), as opposed to a previously expected positive cash flow. Labor issues are also on the horizon for the company; in Italy, a union plans a one-day strike to protest production cutbacks, while the United Auto Workers (UAW) in the U.S. are threatening strikes at various facilities due to claims that Stellantis has not upheld commitments to manufacture vehicles. 
 

A central concern relates to the UAW contract stipulation regarding the reopening of a factory in Belvidere, Illinois, as well as the establishment of a parts warehouse and an electric vehicle battery plant in the same region. In a contract letter, Stellantis promised to produce new gasoline and electric midsize pickups in Belvidere starting in 2027. UAW President Shawn Fain suggested that the company is looking to postpone the factory reopening until after the contract concludes in 2028, thus absolving their legal responsibilities. He also criticized reports suggesting a potential relocation of production for the Dodge Durango SUV from Detroit to Canada. 
 

Fain stated, “The poor management by the top executives is detrimental to this company.” Stellantis has denied these relocation plans and indicated that delays regarding the Belvidere factory are due to market conditions, not cancellations. The company has also asserted that investment plans for the plants must receive corporate approval and may be altered depending on the market landscape. Several local union offices have initiated grievances over these developments, and Stellantis has filed a lawsuit seeking damages should the union proceed with strikes. 
 

Industry analysts suggest that Stellantis has struggled to meet the demand for affordable models, which have become increasingly sought after by U.S. consumers. The pandemic and the global semiconductor shortage had previously masked this issue, as many buyers opted for larger, more expensive vehicles during those periods. However, as chip supply issues begin to alleviate, consumers are now leaning towards more economical options amidst ongoing high-interest rates. 
 

Ivan Drury, from Edmunds, explained that Stellantis lacks the necessary models catering to this growing demand, resulting in vehicles sitting on dealership lots for about 100 days, double the industry average. The company’s product lineup is considered outdated, with limited recent updates, making it difficult to attract potential buyers. Sam Abuelsamid, a mobility analyst, noted the requirement for an upgraded product range that meets market needs—this includes a new small electric Jeep projected to cost around $25,000. 
 

Dealers have expressed frustration, publicly requesting greater discounts to help sell the vehicles. However, analysts like Drury believe that the resolution to Stellantis’s issues will take time, highlighting that it can take years to develop new models that align with consumer preferences. The company had phased out midsize and compact cars nearly a decade ago, leaving little room for quick changes under Tavares’s leadership. “At this stage, other than offering incentives and price reductions, there’s not much else that can be done,” observed Drury.