Can this European CEO revive the American maker of Jeeps and Rams?

Tavares orchestrated a $52 billion trans-Atlantic megadeal to form Stellantis nearly four years ago, bringing together staple European car brands such as Peugeot and Opel under the same company as popular American names such as Ram, Jeep and Dodge.

Just nine months ago, strong North American profits were fueling results that delighted investors and blew away competitors. Today, Tavares is under pressure from all sides: investors grappling with the declining share price; dealers fighting exasperation as cars pile up on lots; a union protesting a delayed plant reopening; and parts suppliers bristling at the company’s moves to cut expenses.

Some U.S. dealers and recently departed Stellantis executives claim Tavares’s team failed to adjust as pandemic-era pricing muscle began to fade, leaving Jeeps and Rams priced too high relative to competitors.

Stellantis’s U.S. market share slid to 8.4% this year through August, from 9.6% last year and 11.6% in 2021, according to research firm Wards Intelligence. That marks a sharp drop in an industry where sales executives battle over fractions of a percentage point.

Tavares has urged caution on slashing prices and deepening discounts for vehicles, arguing the company must preserve the value of its brands. He has said the company aims to price models at the upper end of a given vehicle category, while adjusting relative to competitors.

This summer, he acknowledged missteps in the U.S. market that have cost Stellantis market share and said he would spend more time in North America to fix the problems.

“There is no dogmatism in our approach," Tavares told investors in July, referring to changes in prices. “There is just a sense that we need to take care of spending your money in the appropriate way."

On Monday, Stellantis Chief Financial Officer Natalie Knight said the company had cut prices and offered discounts on some models to clear jam-packed dealership lots. The moves came after months of dealer acrimony over bloated inventory and declining sales, including in a sharply worded letter from influential dealers to Tavares this month, a rare public rebuke from retailers urging the CEO to take action.

This week, following a Bloomberg report that said Stellantis was searching for Tavares’s successor, the company said it is normal for a board to consider succession ahead of a CEO’s contract expiring. Tavares’s contract is up in 2026.

Stellantis said it worked with dealers on a plan for the U.S. that included increased marketing, helping lift vehicle sales 21% in August from a year earlier. The company said it reduced U.S. inventory by about 10% in July and August and was aiming to trim further by year’s end.

Still, the troubles in the U.S. market have pressured financial results and Stellantis’s stock price. Since reaching a record in March, U.S.-traded shares have been cut in half, making the company the worst performer among traditional automakers globally, according to Dow Jones Market Data. The retreat follows a 64% increase in 2023, and the stock is still up 6.2% from when Stellantis was formed.

Executive turnover

The 66-year-old Portugal native rose through the ranks at France’s Renault before moving to Nissan, where he eventually led operations in North and South America and boosted the Japanese company’s market share.

Later, as chief executive of Peugeot parent PSA Group, Tavares oversaw a rapid turnaround, swinging the company from a multibillion-dollar loss when he took over in 2014 to a profit in a few years. He impressed investors again when he turned Opel, a long-unprofitable General Motors brand, into a moneymaker after PSA acquired it in 2017.

The 2021 combination of Fiat Chrysler Automobiles and PSA, negotiated by Tavares, created a car-making behemoth to compete with large rivals. Tavares touted $6 billion in potential cost savings from combining parts of the two manufacturers.

Now Tavares has to fix the company he created—and without some veteran leaders in North America. A number of U.S. executives who predate Tavares’s tenure have departed in recent months, including operations chief Mark Stewart, who left to become CEO of Goodyear Tire & Rubber.

Stellantis said executive turnover is common in the auto industry.

Dave Kelleher, who has served on Stellantis and its predecessors’ dealer-advisory councils since 2007, said leadership has slashed marketing budgets for dealers and limited model offerings, while also failing to give regional managers the necessary tools to turn things around.

“Tavares seems to blame the North American management team," Kelleher said. “But they’re handing them a shotgun, putting one bullet in it and asking them to come home with six deer."

Decision-making about some of Stellantis’s regional operations has increasingly been centralized in Europe, one of the company’s other major markets, according to people familiar with the matter.

Marketing moves across regions, including spending on promotional deals, are now approved by Knight, the CFO, the people said. That marks a departure from past practice, where executives in the region had discretion, they said.

“Each region has autonomy and importantly enjoys the benefit of a strong network of global leaders with varied experiences unlike domestic competitors," Stellantis said, adding that each region has “full responsibility" for its business and financial results.

Dealers have said the company balked at offering deals directly to car buyers or cutting sticker prices, instead opting for complex and unorthodox incentive programs that dealers say have been ineffective at boosting sales.

The company has said a selection of new models hitting dealer lots before the end of the year will help drum up sales. Those offerings include multiple brands’ first fully battery-powered models.

Union, supplier unrest

Meanwhile, the United Auto Workers has threatened to strike Stellantis’s U.S. factories, as union leaders express anger over factory layoffs and the company’s decision to delay the reopening of a plant in Illinois.

Stellantis said it has honored all commitments made in last year’s labor contract with the UAW, arguing it has the right to adjust the timing of investments based on market conditions.

Also in recent months, some of Stellantis’s parts suppliers have criticized the company for changes the automaker has made in its contract terms. In June, the company imposed and retroactively applied a new policy on how much warranty costs suppliers must pay, which supplier attorneys say is a breach of contract that will unfairly increase expenses.

Stellantis said the company had the right to debit suppliers for warranty costs, and that it has worked with them to offset inflation in recent years.

At the investor conference Monday, Knight acknowledged that the company has work to do to quell criticism from many corners, including dealers, unions and suppliers.

“When times are tough, you get friction everywhere," she said.

Write to Ben Glickman at ben.glickman@wsj.com