When 24-year-old Elena Aragon decided to buy a new car, she looked at a number of brands in her hometown of Cadiz, Spain, including Fiat and Peugeot, of the Stellantis Group.

She eventually purchased a Hyundai.

"I didn't like the basic models of Fiat and Peugeot. But the more advanced ones, with the features I wanted, were too expensive," said Aragon, who opted for a compact i20 car with blind spot sensors and a rear camera.

"I got a good discount and ended up paying 17,000 euros," he added.

Aragon's choice highlights a problem that has plagued Stellantis under CEO Carlos Tavares, who resigned abruptly yesterday: rising prices for its FMCG brands have driven away customers already hit by inflation, according to Reuters interviews with five dealers, five consumers, two automotive industry managers and an analysis of price data by market research firm Jato Dynamics.

Tavares -- who has led Stellantis since it was formed in January 2021 from the integration of Psa, owner of Peugeot, and Fiat Chrysler -- had flattered investors with rapid post-merger cost cuts and raised operating profit margins to about 13 percent last year, nearly double those of rivals Volkswagen and Renault.

But the good start faded after declining sales and swelling inventories in the more profitable North American market led the group to issue a profit warning in September and later announce that the CEO would retire in 2026.

Investors have focused on Stellantis' problems in the United States, but the group is also experiencing difficulties in Europe.

Under Tavares' leadership, Stellantis has lost a third of its market share in the Old Continent. Over the same period, Fiat's market penetration in Europe has halved to 1.8 percent, while Citroen's has shrunk to 2.2 percent, according to data from the European automotive association Acea.

Stellantis largest shareholder is the Agnelli family through Exor, led by John Elkann.

Yesterday, the group announced that it had accepted Tavares' resignation "effective immediately" and that Elkann will preside over a new interim executive committee.

The stock in Piazza Affari around 11:10 a.m. lost about 8 percent, at the lowest since July 2022.

European dealers who spoke to Reuters point the finger at Tavares' focus on efficiency and margins.

"Low-priced models have gradually disappeared from the Stellantis range," comments Alberto Di Tanno, founder of the Intergea dealer group, which operates 169 outlets in Italy and Switzerland.

For example, Lancia's Ypsilon model, one of the 10 Stellantis brands available in Europe, "used to be a 17,000 euro car. Now, suddenly, it costs no less than 25,000 euros," Di Tanno said.

In September, the average retail price of a Stellantis car in the 14 largest euro zone countries was nearly 40,000 euros, higher than the average for other mass market competitors, according to data provided by Jato Dynamics to Reuters.

Cars from China's Saic, which owns the British MG brand, sold for 32,500 euros, while models from Renault, Mitsubishi and Suzuki cost less than 29,000 euros on average.

Since 2021, Stellantis prices have increased in each of the five largest European markets-Germany, France, Italy, Spain, and the United Kingdom. Hyundai and Toyota have also increased prices in these markets, but Volkswagen and Renault have reduced them.

"Prices are increasing for Stellantis brands, but customers still look at many of them as mass market," said Felipe Munoz, senior analyst at Jato.

A former sales executive who has long lacored for Stellantis told Reuters that the higher pricing policy, as well as aggressive cost cuts, were part of Tavares' push for double-digit operating profit margins, particularly after the Covid pandemic.

Stellantis difficulties in Europe mirror some of the problems the company has faced in North America with the premium Jeep brand.

Erin Keating, an analyst at Cox Automotive, said buyers have been shocked that Jeeps selling for $35,000 in 2019 have topped $60,000 this year, with some models even above $100,000. The cost of these models has been hard to swallow for many buyers who prioritized Jeeps for their ruggedness and affordability.

"It chased profits. They drove up vehicle prices, and I think he forgot to ask, 'Who is my American consumer?" noted Keating about Tavares.

Stellantis told Reuters it plans to launch about 20 new models in the coming months, in all segments, with the goal of achieving a 20 percent market share in the European Union.

These include the Citroen C3, which starts at 23,000 euros in the electric version but costs less than 15,000 euros with a combustion engine.

FAILED AMBITION

As with other European automakers, Stellantis problems in Europe have been exacerbated by fierce competition from Asian rivals, including Hyundai and Toyota.

Chinese automakers, including BYD-which together account for about 5 percent of car sales in Europe and could capture a 12 percent market share by 2030, according to the consulting firm AlixPartners-have jeopardized Stellantis's bid.

The Fiat 500, traditionally associated with affordable mobility, is on sale only as an electric vehicle, at about 29,000 euros.

"Stellantis prices are not right," said Tony Fassina, founder of one of Milan's largest car dealers. "At the right prices, the demand is there."

Herman Claes, president of the Stellantis dealers' association for Belgium and Luxembourg, said more and more Stellantis dealers in the region have begun offering other brands to compensate for the slowdown in sales, which benefits Chinese automakers.

The complexity of the group has also been a problem.

With 14 brands globally, Stellantis has the largest number of brands among traditional automakers. After Porsche spinoffs in 2022, Volkswagen operates nine brands. Toyota owns only three.

Stellantis' broad portfolio, however, has failed to secure clearly differentiated products, with Fiat and Citroen competing in the cheaper segment, Jeep and Alfa Romeo in the premium segment.

To ensure savings, Stellantis' medium-sized vehicles are developed on the same STLA Medium technology platform, while smaller cars use Peugeot's CMP platform.

"Many Stellantis models overlap," commented Plinio Vanini, owner of Italy's largest dealer group Autotorino.

(Giulio Piovaccari, Alessandro Parodi, Inti Landauro, Italian version Sabina Suzzi, editing Claudia Cristoferi)