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Stellantis ( STLA ) CEO scheduled to speak at five car show events

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Under pressure to fix US business after big profit warning

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Tavares has said he will step down in 2026

By Nick Carey, Ben Klayman and Gilles Guillaume

PARIS, Oct 14 (Reuters) - Carlos Tavares' packed

schedule of public events at the Paris auto show on Monday

signals the Stellantis ( STLA ) CEO will come out fighting

after a massive profit warning in late September, even after

announcing his retirement date.

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 resumed their slide on

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

a major management reshuffle failed to soothe investors.

Previously seen as almost invincible after revving up

Peugeot maker PSA and then overseeing its merger with Fiat

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

territory as he embarks on a media blitz on Monday.

The 66-year-old is 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.

Tavares will be under pressure to explain how he plans to

revive Stellantis' ( STLA ) fortunes in his remaining 18 months at the

helm at a time of growing competition from cheaper Chinese

rivals, weak demand, and rising costs.

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."