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Stellantis ( STLA ) CEO spoke at four car show events

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Under pressure to fix US business after big profit warning

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Tavares cited 'personal reasons' for not seeking further

term as

CEO

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CEO did not rule out job cuts to revive business

(Updates intro, adds detail in 9th paragraph and shares in 14th

paragraph)

By Nick Carey, Ben Klayman and Gilles Guillaume

PARIS, Oct 14 (Reuters) -

Stellantis ( STLA ) CEO Carlos Tavares alternated between

defiance and contrition about the company's turnaround plans on

Monday in a packed schedule of public events at the Paris auto

show following a massive profit warning.

The Sept. 30 warning from the world's No. 4 automaker

shocked investors used to high margins fueled by lucrative U.S.

pickup truck and Jeep sales. Stellantis ( STLA ) stock is now down nearly

45% year-to-date.

Tavares initially brushed off the U.S. problems as a "small

operational error." But Stellantis ( STLA ) shares slid further last week

as news of his exit when his contract expires in 2026 and a

major management reshuffle failed to soothe investors.

Speaking to reporters at the show on Monday, Tavares said he

had not sought a further term as CEO "for personal reasons".

"I'm the guy who is heading the company, so I'm here to take

the hits," Tavares told reporters.

But Tavares said Stellantis' ( STLA ) U.S. problems came down to a

"risky" second-quarter marketing plan decided upon by regional

managers in that market.

"I saw that it was risky," Tavares said. "I could have

stopped it. I didn't and it didn't work."

Previously seen as almost invincible after revving up

Peugeot maker PSA and then overseeing its merger with Fiat

Chrysler to create Stellantis ( STLA ), Tavares was in unfamiliar

territory as he embarked on a media blitz.

The 66-year-old was scheduled to speak at five events, the

same as Renault CEO Luca de Meo but more than

executives from BMW and many other automakers.

Volkswagen chief Oliver Blume will not attend the

show at all. In the end, he took questions at four briefings.

Under pressure to explain how he plans to revive Stellantis' ( STLA )

fortunes in his remaining 18 months in charge at a time of

growing competition from cheaper Chinese rivals, weak demand,

and rising costs, Tavares told French radio RTL he could not

rule out job cuts.

He also said keeping up with Chinese rivals and staying

profitable could require plant closures or offloading brands,

adding it was up to the group's customers to decide which brands

had a future.

He also said Stellantis' ( STLA ) U.S. problems should be fixed by

the end of the year.

"It's essentially a problem of excessive inventories," said

Tavares, adding: "I can safely say the problem will be solved

before Christmas 2024."

An investor update would probably come before Christmas, he

told reporters. The company's shares ended the day up 1.6%.

Data from analysts and interviews with industry players show

major U.S. operational errors at Stellantis ( STLA ), which raised prices

beyond customers' budgets then reacted too slowly to discount

models, leaving tens of thousands of cars stuck on dealer lots.

"They tried for too long to stand tough on pricing," said

Erin Keating, an analyst at researchers Cox Automotive, whose

data show inventory problems across the board at Stellantis ( STLA ).

"When the U.S. is your cash cow, it seems negligent to

ignore it."

Dealers complain that, besides over-pricing, Stellantis ( STLA )

scrapped entry-level vehicles and under-invested in popular cars

while rivals including Ford and General Motors ( GM )

revamped theirs.

Ford in particular has eaten into Jeep's market with its

Bronco SUV.

In a Sept. 10 letter to Tavares, Stellantis ( STLA ) national dealer

council president Kevin Farrish complained the pursuit of

short-term profits meant "rapid degradation" of the Jeep, Dodge,

Ram and Chrysler brands, adding: "You created this problem".

David Kelleher, president of David Auto Group, which has a

Chrysler-Dodge-Jeep-Ram store outside Philadelphia, said when

Stellantis ( STLA ) was created in 2021 he sold an average of 165 new

cars per month. This year, that has fallen to 89.

"We need a CEO who understands the North American market,"

Kelleher said.

Tavares faces tough choices and a possible battle with the

United Auto Workers (UAW) union to fix Stellantis' ( STLA ) problems. The

UAW has threatened to strike over delayed investments, prompting

lawsuits from Stellantis ( STLA ) accusing the union of breach of

contract.

Experts say, long term, Stellantis ( STLA ) must determine whether it

needs four separate U.S. brands.

'PRICED OUT OF THE MARKET'

In downturns going back to the early 1980s when Lee Iacocca

turned Chrysler around, the company that is now Stellantis ( STLA ) has

often been the first of the Detroit Big Three to suffer, with

lower-cost products and more price-sensitive customers.

Today, Stellantis' ( STLA ) problem is different.

Like rivals, Stellantis ( STLA ) raised prices during the pandemic as

supply chain glitches caused shortages of new cars. But it then

refused to lower them.

Pat Ryan, CEO of car-shopping app CoPilot, said Stellantis ( STLA )

raised prices 50% between 2019 and 2024, while inflation rose

23%.

"Stellantis ( STLA ) really priced themselves out of their historical

market," Ryan said.

Data provided to Reuters by CoPilot show 131 days supply on

dealer lots of Ram 1500 pickup trucks, 41 days above its nearest

rival the Chevrolet Silverado. Supply of the Jeep Wagoneer

stands at 137 days, 22 days above nearest rival the Ford

Expedition. Other models show similar or even larger gaps.

"Everyone has inventory problems, but nowhere near as

chronic or dramatic as at Stellantis ( STLA )," Ryan said.

A slow response left Stellantis ( STLA ) with a higher proportion of

2023 model year cars - that require larger discounts to sell -

than most rivals on dealer lots even as 2025 models arrive.

Cox Automotive data provided to Reuters show as of early

October Stellantis 2023 models still accounted for 19.3% of

Dodge cars, 8.3% of Chrysler vehicles, 2.3% of Ram trucks and

1.3% of Jeeps on dealer lots. Meanwhile, 2025 models already

account for 36.6% of Ram's inventory and between 11% and 14.5%

for the other brands.

Stellantis ( STLA ) reported a 20% drop in third-quarter U.S. sales,

despite "aggressive" incentives across its U.S. portfolio.

According to Cox data, incentives for Jeeps as a percentage

of average transaction price rose to 9% in September from 5.3%

in May and to 9.6% from 6.3% for Ram pickup trucks.

CoPilot's data show Stellantis ( STLA ) offering $4,500 cash back on

a Ram 1500 pickup truck, Ryan said, but Stellantis ( STLA ) may need to

double discounts to slash inventories.

It could also cut production.

"They (Stellantis ( STLA )) just need to produce less ... for a few

months to get dealer stock back in line," said Brian Sponheimer,

an analyst at Gabelli Funds, a Stellantis ( STLA ) investor.

Beyond the immediate crisis, experts say Jeep and Ram - and

especially Dodge and Chrysler - have few vehicles, but each with

separate and costly marketing, branding and design teams.

"Stellantis ( STLA ) has substantial brand work to do in the U.S.,"

Cox's Keating said. "And that's going to be painful."