Stellantis wants to earn back the trust of its US dealers after a tumultuous year. It won't be easy.
The Jeep owner topped the list of least-trusted franchises among dealers in Kerrigan Advisors's annual dealer survey, with a whopping 72% of Chrysler-Dodge-Jeep-Ram dealers reporting they have "no trust" in Stellantis.
The dismal result for Stellantis — the highest rate of "no trust" responses in the survey's history — comes after a tumultuous year for the global automotive giant. Aggressive cost-cutting measures rankled US dealers, many of whom wrote an open letter criticizing the company's product decisions over the summer.
Amid slowing sales and shrinking dealer profits, the letter accused former CEO Carlos Tavares of "reckless short-term decision-making" that had "devastating, yet entirely predictable, consequences in the US market."
CFO Doug Ostermann told investors that rebuilding trust with dealers is a top priority for the next management team.
Following Tavares's abrupt exit last month, Stellantis dealers were relieved. Kevin Farrish, the Stellantis dealer body president and Chrysler-Dodge-Jeep-Ram owner in Virginia, told Business Insider at the time that he was encouraged by how swiftly executives were making changes after Tavares's exit.
"We needed change, so provided the changes are correct — and they are thus far — it shows their commitment to fix things," Farrish said.
A Stellantis spokesperson did not immediately respond to a request for comment.
The results of the annual Kerrigan Dealer Survey are often in line with what dealers say publicly throughout the year. In 2023, for example, Ford was the least-trusted company among dealers after the parties disagreed over EV strategies.
But the results of this year's survey, based on more than 635 anonymous responses from dealers in Kerrigan Advisors database between June and November, offer the first concrete look at the rift between Stellantis and its dealers. And the divide is stark.
For context, about 46% of dealers reported "no trust" in Ford last year, showing that a slim majority still had trust in the Detroit automaker. That makes the 72% of dealers who reported "no trust" for Stellantis all the more alarming, Kerrigan told Business Insider in an interview.
While Ford and its dealers disagreed over EV strategies, Stellantis dealers felt more betrayed by their company, Kerrigan said. Efforts by the company to raise prices after the pandemic cut deeply into dealers' profit margins
"The difference here is numbers-based," Kerrigan said of the stark difference between Ford and Stellantis's divide with dealers. "Stellantis saw dealer profit margins during the pandemic and wanted a piece of that."
In addition to losing trust in their brands' strength, more than 64% of dealers surveyed said they expect their franchise values to decline in the next 12 months.
Kerrigan Advisors is the leading exclusive sell-side advisor and thought partner to auto dealers nationwide. Since its founding in 2014, the firm has led the industry with the sale of over 280 auto dealerships representing $9 billion in client proceeds, including the third largest transaction in auto retail history – the sale of Jim Koons Automotive Companies to Asbury Automotive Group. Kerrigan Advisors advises the industry’s leading dealership groups, enhancing value through the lifecycle of growing, operating and, when the time is right, selling their businesses. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, consulting, accounting, finance and real estate, we not take listings nor do we employ a brokerage model; rather we develop a customized sales approach for each client to achieve their personal and financial goals. In addition to the firm’s sell-side advisory services, Kerrigan Advisors also provides a suite of automobile dealership consulting and investor services including growth strategy, market valuation assessments, capital allocation, transactional due diligence, open point proposals, operational improvement and real estate due diligence.
Kerrigan Advisors monitors conditions in the buy/sell market and publishes an in-depth analysis each quarter in The Blue Sky Report®, the industry authority on dealership buy/sell market trends and valuations and includes Kerrigan Advisors’ signature blue sky charts, multiples and analysis for each franchise in the luxury and non-luxury segments. To download a preview of the report, click here. The firm also releases The Kerrigan Index™ comprised of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To access The Kerrigan Index™, click here. To read the 2024 Kerrigan Dealer Survey, click here. To read the 2024 Kerrigan OEM Survey, click here. Kerrigan Advisors also is the co-author of NADA’s Guide to Buying and Selling a Dealership.
Contact us to learn more about Kerrigan Advisors’ sell-side services.
All of our conversations are 100% confidential.
