@F1appassionato you're right about Tavares making a profit, which is good in the short term, however I think his seeming complete disinterest in actually selling cars will cause problems in the long term...Long term being 5 years.
Why? Circuit City.
They were a popular electronic store in the US founded in the 70's that went out of business in the 2000s.
Unlike their competitors, Circuit City made a profit. In the 80's through the early 2k's this sent their stock up by about 8000%, and they were a darling of the market. However increased competition in the market changed all this by the end of the 90's so much so that the entire corporation was gone by 2009.
What happened?
Competitors like Best Buy didn't care about making a profit on each sale, they just wanted to sell items and make their profits on the backend. Which they did, so well they eventually stole so many sales from Circuit City, it didn't matter how much profit Circuit City made on each sale, because they weren't selling anything.
Thankfully, due to the profits Circuit City had been making for decades, Circuit City didn't just roll over here. No, they revamped store floor plans and fascias to be more like competitors, retrained staff to act more like the staff at competitors, announcing new store designs and sales concepts every few years for a while. Which the corporation could do this thanks to all the money it had laying around due to the high profit margins. (
Exactly like how Stellantis can keep investing billions and is constantly revamping their plans, delaying releases to change them, etc.)
Thing is playing catch-up never worked (
It never really does). They just burned through all the money in the bank as sales continued to drop till eventually the corporation disappeared. Despite never selling items at a loss, always generating a profit on sales. Right up till there weren't any sales.
From what I see, Stellantis is the next Circuit City, but their position is worse then Circuit City's. At least Circuit City didn't have the products that generated their highest sales taken away by regulations, where-as Stellantis is.
Fact is, most of the profit generated by Stellantis the last few years has been due to market forces that are, or already have, ended.
The rush to get the last V8 engine cars. Hugely profitable ... And pretty much over. Except for the QV now I guess. (And sadly the QV doesn't have the fan base Mopar muscle does)
The supply shortages that meant every car built sold as fast as it hit a lot. Over.
Low interest rates and easy financing approval. Over.
Meanwhile the upcomming products Stellantis has bet thier future on...isn't really selling. Not for anyone.
Again... Exactly like Circuit City.
To make matters even more interesting and appropriate...
Circuit City established CarMax. CarMax was originally a subsidiary of Circuit City and was spun off in 2002.
Notice, CarMax has been one of the best performing stocks in the auto sales industry for years... But has fallen for the last 7 quarters.
Why? You gotta sell cars to make money in the car business and CarMax isn't selling many cars anymore.
Neither is Stellantis. However Stellantis thinks they don't need to sell if their profit is high enough.
Stellantis is the next Circuit City unless something changes. Why? Stellantis is acting like Circuit City and the entire rest of the industry is acting like Best Buy. Even CarMax. Discount, discount discount.... Focus on cheap affordable cars. Stellantis.however is going mark up mark up, mark up, make everything luxury/premium.
Circuit City was the first stock I ever invested in. It paid off my college loans and was very profitable for quite a while.... Out of business now. Profits aren't more important than sales... Not ever.
Did you see the news today Mercedes as announced a reversal of the product strategy they announced just last year?
They are going to stop focusing on high end vehicles and EVs to begin focusing on affordable gas powered ones. Why? They realize that's what sells and profit follows sales not the other way around.
