Sales in free fall after years of success: it took just a few months for Stellantis shareholders to remove the intractable head of the automotive group, Carlos Tavares, whose resignation was announced on the evening of Sunday 1 December.
The board of directors had already suspended Carlos Tavares, 66, announcing his retirement in early October and starting a succession process, but disagreements precipitated his resignation.
the Board of Directors, which met on Sunday, “accepted the resignation of Carlos tavares”the parent company of Peugeot, Jeep and Fiat indicated in a press release. The planets were no longer aligned, with “different points of view” between the board of directors and the manager, explained Henri de castries, director of Stellantis.
The PSA-Fiat-Chrysler megamerger
Coming from Renault,Carlos Tavares made a name for himself in the automotive sector by reorganizing the PSA group (Peugeot-Citroën) starting in 2014,cutting costs. He then succeeded, apparently, in the mega bet on the merger between PSA and FCA (Fiat-Chrysler): sence the creation of this group with fourteen brands in 2021 – from Peugeot to Fiat via Chrysler and Maserati – Stellantis has established a series of record net profits.
Even though the French state is a shareholder in Stellantis, a French government source highlighted this on Sunday “Carlos Tavares will have led the acquisition of Opel in 10 years at the helm of the group and then the merger of PSA and Fiat Chrysler Automobiles in 2021, after managing the meaningful disruptions related to the Covid crisis”.
The group also quickly turned to hybrid and electric cars. But Stellantis coughed through the first half of 2024,with net profit halved,before seeing its margins collapse in the face of more severe than expected difficulties in North America – its ATM – with vehicles of criticized quality and prices seen as too high .
Decrease in production
Carlos Tavares had to abandon his sacred operating margin target at the end of September “two digits” for the year, which placed him far ahead of his competitors, and justified his expected salary of 36.5 million euros for 2023. Simultaneously occurring, at the begining of October he had shaken up the organization of group, choosing more sellers to increase sales.
The year 2024 was also marked by delays in the launch of several models, caused in particular by electronic problems.
The decline in production in many factories has not failed to cause concern, as in Italy, home of Fiat, where thousands of protesters demanded accountability in mid-October. Giorgia Meloni’s government criticizes the manufacturing company for having outsourced production to low-cost countries, to the detriment of Italian factories.
John Elkann, heir to the group’s main shareholder, the Italian Agnelli family, takes over the leadership of a new temporary executive committee. He did it “The President of the Republic Sergio Mattarella and the head of government Giorgia Meloni have been personally informed” of the news of Carlos Tavares’ resignation, indicated a spokesperson for the president of the Stellantis board of directors.
Closure of a factory in London
In France, the group’s management assured last week that no plant closures were expected in the short term, despite the expected drop in production. But in the United Kingdom, the group announced the closure of the Vauxhall factory in Luton (north of London), which employs more than 1,100 people.
Carlos Tavares assured that the situation in the United States is recovering and that in Europe it is indeed not the only group experiencing difficulties in this period. “Darwinian”. But he had not fully convinced either the markets or the workers.
This ad “A sudden (…), combined with the creation of a temporary executive committee without strong leadership, dangerously exposes the group to a serious crisis”reacted Philippe Diogo, central trade union delegate of the FO group.
The leaders of Stellantis for their part have assured that the slowdowns in 2024 are due to “transition” between two vehicle generations. They promised a vigorous relaunch in early 2025 with the advent of the new models.
The process of appointing the group’s new general manager is already underway “on track” et “will be completed in the first half of 2025”the group emphasized.
How did Carlos Tavares impact Stellantis’s strategy before his departure?
Interview: The Rise and Fall of carlos Tavares at Stellantis
Setting: A cozy conference room in the Time.news office, with warm lighting and a few automotive magazines scattered on the table. The editor, Lisa Brandt, prepares to interview automotive expert Dr. Alan Sorenson,who has closely followed the developments at Stellantis.
Lisa Brandt: Welcome,Dr. sorenson, and thank you for joining me today.It’s quiet a dramatic turn of events with Carlos Tavares stepping down from Stellantis. What are your initial thoughts on his resignation after such a successful tenure?
Dr. Alan Sorenson: Thank you for having me, Lisa! Tavares’s departure is indeed surprising, especially given his previous accomplishments in transforming PSA Group before the merger with Fiat Chrysler. his knack for cutting costs and streamlining operations was lauded. However, it seems that the board’s lack of alignment with him regarding the company’s future strategy played a critical role in this decision.
Lisa Brandt: absolutely, the idea of “different points of view” mentioned by Henri de Castries suggests deeper issues. What do you think those disagreements could be centered around?
Dr. Alan Sorenson: There are likely numerous factors at play.Stellantis operates in a rapidly changing automotive landscape, especially with the shift towards electric vehicles and sustainability goals. Tavares has been known for a somewhat customary approach, focusing on profitability and existing models. The board may have wanted a more aggressive, innovative strategy to embrace electric mobility, which could have created tension.
Lisa Brandt: That makes sense, considering the automotive industry is at a pivotal crossroads. Do you think Tavares’s management style might have influenced the disconnect with the board?
Dr. Alan Sorenson: It’s certainly possible. Tavares is known for being a decisive leader who makes bold moves, but that can sometimes conflict with a board’s expectations for consensus and collaborative strategy formulation. The rapid pace of changes in the industry means that companies need to be adaptable, and if his approach was perceived as inflexible, it might have caused friction.
Lisa Brandt: You mentioned the merger between PSA and Fiat Chrysler. Under Tavares, Stellantis was expected to mesh those different corporate cultures. How do you think his resignation impacts the integration efforts?
Dr. Alan Sorenson: The merger was already a complex undertaking, balancing the heritage and operational styles of both companies. His departure introduces uncertainty and could slow down integration efforts as a new leader steps in and reassesses strategies and goals. If the new executive takes a different direction, it could lead to further complications in aligning the companies.
Lisa Brandt: looking ahead, who do you think would be a strong candidate to replace Tavares, and what direction should they take?
Dr.Alan Sorenson: Candidates with a strong background in both traditional and electric vehicle technologies would be essential. Someone like Mary Barra from GM or even someone internally who understands the European and American markets could be effective. They’ll need to focus on innovation while managing costs effectively to navigate this transitional phase in the automotive industry.
Lisa Brandt: that’s an insightful outlook. Before we conclude, what do you think is the overarching lesson here for other leaders in the automotive industry?
Dr. Alan Sorenson: The automotive sector is shifting faster than ever, which means leaders must remain adaptable and open to change. Balancing strategic vision with collaboration among stakeholders is critical. Leaders need to ensure they have their teams aligned with the company’s long-term goals while also being bold enough to pivot when necessary.
Lisa Brandt: Thank you, Dr. Sorenson! Your insights on the complexities within Stellantis and the automotive industry as a whole have been invaluable. It will be engaging to see how this plays out in the coming months.
Dr. Alan Sorenson: My pleasure, Lisa! I look forward to discussing more developments as they unfold.