Chrysler Jeep Dodge Ram Dealers Say Their Brands Are A ‘Disaster’ And They Know Who To Blame

It is getting messy in Auburn Hills, the corporate HQ of Stellantis North America. Real Housewives of Beverley Hills-level drama. On one side you’ve got the leadership of the Stellantis National Dealer Council (NDC), and on the other side, you’ve got Carlos Tavares being painted as the Lisa Rinna-type villain. It is naaaaaaasty.

The theme of today’s Morning Dump is: Friends and Enemies. We’re going to start with Carlos Tavares because, if you believe his dealers, he’s basically traded the company’s future for a short-term financial gain that has benefited him and no one else. Stellantis, as you might guess, disagrees.

Nissan’s dealers are also unhappy with their leadership as the company looks to cut its way to success.

China, notably, has a lot of friends. It also, notably, has a lot of less-than-friends. The country’s automakers are looking to expand production overseas, in spite of a decent amount of domestic overcapacity, and a new report makes it sound like China’s leadership is winking and nodding as to where it might be smart, or not smart, to build new plants.

And, finally, GM and Hyundai embarked on a big friendship today in order to… do things. Many things. They don’t have a specific plan, but they at least have the concept of a plan.

Stellantis: ‘We Take Absolute Exception’ To Being Told We Suck

Dealer groups and their OEMs are like teenagers and parents. They all generally want to be prosperous and understand that prosperity involves working together, but that doesn’t mean they always get along. Sometimes they’re at cross purposes and the parents have to act a certain way while the teenagers, being teenagers, get a little bit of leeway.

It varies from company to company, depending largely on ownership structure, but the CEOs aren’t always the dads (or moms) in this scenario. They’re the step-parents. In the case of Stellantis, whose brands include Chrysler/Jeep/Dodge/Ram/Fiat/Alfa Romeo/Maserati in the United States, the stepdad is Carlos Tavares, pictured above.

The teens are not happy. In fact, they are super pissed at Tavares for his management of the company. And, sure, Stellantis is a global brand. A global brand that loses money in a lot of the world and makes a big chunk of that money back in the United States!

All of this came to light because the NDC, and its president Kevin Farrish, sent an open letter calling out Stellantis for a bunch of mistakes. From Bloomberg, which saw the letter:

Retailers accused Tavares of “short-term decision making” that boosted profits last year and padded the CEO’s compensation. The moves ended up shrinking the company’s market share and hurting the Jeep, Ram, Dodge and Chrysler brands, the national dealer council said in an open to Tavares dated Sept. 10.

[…]

“For over two years now, the US 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 group said in the letter. “A disaster not just for us, but for everyone involved — and now that disaster has arrived.”

Does Farrish read The Morning Dump? Maybe! Because what he’s calling out sounds awfully familiar, though perhaps it’s just because it’s so obvious. In fact, Tavares has sometimes admitted to making mistakes and being arrogant about the problem. He can afford to be a little arrogant because he’s the highest-paid automotive CEO in the world.

That payout seems to be one of the sticking points with dealers. They’re claiming that their revenues are down as the company just continued to build the same old models while also not investing in any replacements:

Dealers fear Tavares’ recent production cuts will further erode market share. They’ve also criticized him for thin investments in the carmaker’s aging product lineup, such as ending production of the Jeep Cherokee without an immediate replacement in the popular midsize SUV segment.

It’s not a great look, and I am sympathetic to dealers who, instead of being able to sell a bunch of new hybrid products, are stuck trying to shovel old-looking Durangos without enough incentive support. Chrysler has one vehicle, and Dodge only has four (though two are discontinued).

How did Stellantis respond? By putting out the following statement:

We take absolute exception to the letter sent by the president of the Stellantis National Dealer Council (NDC), Kevin Farrish. Last month, we introduced an action plan developed with the dealer body that has already shown results. August sales were up 21% over July, market share was up 0.7 points, and dealer inventory was reduced for two consecutive months by 42,000 units or approximately 10% in total.

This is the result of working together with our dealer network and we want to thank them for their constant support and engagement. We meet and talk monthly, have weekly calls and personal conversations at the highest level. This is where such dialogue should take place.

At Stellantis, we don’t believe that public personal attacks, such as the one in the open letter from the NDC president against our CEO, are the most effective way to solve problems. We have started a path that will prove successful. We will continue to work with our dealers to avoid any public disputes that will delay our ability to deliver results.

Yikes. It’s really giving:

and another thing: im not mad. please dont put in the newspaper that i got mad.

— palantir man (@dril) December 29, 2014

Stellantis doesn’t release monthly sales numbers so we don’t really know how well or poorly it did other than what it says above, but even a 10% improvement means its dealers are stuck with a lot of vehicles. Also, since Stellantis stopped producing a bunch of models, how much of this sell-off is just the natural consequence of not having more new cars?

Here’s the July Days’ Supply of Inventory by Brand graph from Cox Automotive – vAuto, which looks not-great if you’re a Stellantis dealer:

I highlighted the Stellantis brands in red. You can see the industry average in green. The more cars stuck on the lot the worse. If you’re wondering where Ram is, the brand is so bad that it’s too bad to even fit on the graphic (along with Lincoln).

There’s a way to read this that is sympathetic to Tavares. He’s trying to deal with a large company that has stakeholders around the globe, including governments (try to ignore that Stellantis always seems to be in a fight with those governments for a moment), and he’s trying to reconfigure the company for a more prosperous future. This might mean less production in some places and it might be smarter, in the long term, for Stellantis to lose some dealers so it can focus on more profitable markets to protect its margin. That’s a big deal for Stellantis and, so far this year, the company has seen its revenue, sales, and gross profit margins all drop considerably. Worse than any other major automaker.

A less charitable, possibly more cynical view, is that Carlos Tavares worked under Carlos Ghosn at Nissan-Renault and saw another CEO do a good job of increasing the value of his companies without getting compensated for it at what they might feel was a proportional level. Ghosn allegedly tried to fix this problem himself with a little freelance accounting and wound up under arrest in Japan. The other Carlos saw a way to get paid out in a way that wouldn’t land him in jail.

I don’t know what the reality is. I don’t know Carlos Tavares, though I’d love to chat with him. He seems fun. And while he isn’t at any obvious risk of landing in a crate like Ghosn, he’s certainly landed himself in hot water.

Nissan Cuts Production Of Best-Selling Rogue And Frontier Truck

Nissan dealers, like Stellantis dealers, are not exactly DJ Jazzy Jeff’d with their parents, either. A whopping 40% of dealers in this country are reportedly losing money this year and Nissan’s products are average, at best. Nissan, to its credit, seems to recognize this, and is planning an aggressive product push to get itself out of the hole.

It’s going to be rough in the short-term, with Automotive News reporting that Nissan sent a memo to its dealers saying it’ll be cutting production of the Nissan Rogue, which is the company’s best-selling model, and the Frontier. The company has tried to help by turning up incentives, but this move might not help much:

Nissan lacks an incentive strategy to drive Rogue demand, another retailer said, noting the absence of discounts on the base S trim.

“Instead of trying to generate throughput and increase sales and market share, they are going to cut stuff going down the assembly line,” the dealer said.

There are no good immediate solutions to this problem. If Nissan keeps building vehicles it has to aggressively discount it’s just going to lose more money. If it doesn’t, already pinched dealers are going to see market share drop.

It’s bad news.

Chinese Leaders To Automakers: Build Here, But Not Here

China has both a production edge when it comes to EVs and a technology edge. The production advantage (really, production overcapacity) is only a benefit if it can export a lot of cars. Unfortunately for China, that’s getting harder to do, as countries start to pay more attention to China’s sometimes antagonistic foreign policy (tacit support for Russia in the War in Ukraine) and its unfair subsidies, leading to tariffs in many places.

The technological and supply chain edge works just fine if you can build cars in other places and get around any tariffs, which is what automakers are trying to do.

Where, though? According to Reuters, Chinese authorities have some strong opinions about where that should be:

At a meeting held in early July, the ministry told local carmakers not to invest in India, citing a directive from the central government, “strongly advised” against investing in Russia and Turkey, and used a more gentle tone to highlight risks in building factories in Europe and Thailand, one of the people said.

It also encouraged carmakers to use overseas factories for final vehicle assembly with knock-down components exported from China to mitigate potential risks stemming from geopolitical issues, said the person.

Lol. The Russia thing is interesting, but that just makes logical sense. The Turkey-vs-China thing is also interesting. It seems like China, though, is thawing with regard to Europe and Thailand. The knock-down kit thing also works, because you still build most of the car in China and the plant requirements are way lower in whatever country you’re exporting to.

Hyundai And GM Are Going To Do… Something

Hyundai and GM just signed a big Memorandum of Understanding in order to collaborate on, uh, something. Here’s the statement:

GM and Hyundai will look for ways to leverage their complementary scale and strengths to reduce costs and bring a wider range of vehicles and technologies to customers faster.

Potential collaboration projects center on co-development and production of passenger and commercial vehicles, internal combustion engines and clean-energy, electric and hydrogen technologies.

The two leading global OEMs also will review opportunities for combined sourcing in areas such as battery raw materials, steel and other areas.

So… everything? I’ll probably write more about this later, when I understand it better, because I think it’s part of a larger trend.

What I’m Listening To While Writing TMD

Speaking of beefs… do not get into a fight with Kendrick Lamar. You will not win. You will not outlast him. “Not Like Us” is just a nonstop anti-Drake barrage and it’s maybe the greatest, meanest, coldest diss track in hip hop’s long history of diss tracks.

The Big Question

How long does Carlos Tavares have as CEO?

Top photo: DepositPhotos / Terminator 2