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CONSUMER CYCLICALS: Stellantis (STLA Baa1/BBB+/BBB+[P]): Dealer Unrest

CONSUMER CYCLICALS
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Slightly negative for Stellantis. Another OEM feuding with stakeholders. We assume sales are weak so far this quarter for the dealers to send this.

  • The Stellantis US Dealer Council has written an open letter to CEO Tavares describing its current course as a “disaster”. The letter accuses him of short-term decisions in 2023 to boost his own compensation which they say has damaged the domestic brands and eroded market share.
  • Stellantis has been dealing with elevated inventory buildup, failing to offer sufficient incentives in an attempt to protect margins. That has led to production cuts.
  • The dealers’ logic is sound, the industry is clearly experiencing a protracted slump and sitting on ageing inventory in the hope of a recovery doesn’t look like a defensible strategy; particularly with new model launches to come. Stellantis may have to take some pain on profitability to reduce inventory and restore market share.
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Slightly negative for Stellantis. Another OEM feuding with stakeholders. We assume sales are weak so far this quarter for the dealers to send this.

  • The Stellantis US Dealer Council has written an open letter to CEO Tavares describing its current course as a “disaster”. The letter accuses him of short-term decisions in 2023 to boost his own compensation which they say has damaged the domestic brands and eroded market share.
  • Stellantis has been dealing with elevated inventory buildup, failing to offer sufficient incentives in an attempt to protect margins. That has led to production cuts.
  • The dealers’ logic is sound, the industry is clearly experiencing a protracted slump and sitting on ageing inventory in the hope of a recovery doesn’t look like a defensible strategy; particularly with new model launches to come. Stellantis may have to take some pain on profitability to reduce inventory and restore market share.