Yardbird
Senior Member
Stellantis CEO Carlos Tavares lost control of the automaker with ‘arrogant’ mistakes, sources say
Published Tue, Dec 10 2024
Part 1:
DETROIT — “Arrogant.” It’s the word former Stellantis CEO Carlos Tavares used in June to describe mistakes that led to the automaker’s troubles in the U.S. It’s also how executives who worked with him described the automotive veteran to CNBC over the past year.
Several former or current leaders, as well as other U.S. employees with the trans-Atlantic automaker, said Tavares’ relentless focus on cost-cutting, his goal of achieving double-digit profit margins under his “Dare Forward 2030” business plan, and a reluctance, if not unwillingness, to listen to U.S. executives about the American market led to the company’s current situation and, ultimately, Tavares’ departure last week.
The sources, who agreed to speak on the condition of anonymity in order to talk freely and avoid repercussions, were interviewed at various times throughout 2024, including several last week.
They described the Portuguese-born executive as being fixated on near-term cost reductions and profits to the detriment of the business as well as to the company’s products, employees and relationships with suppliers, unions and dealers.
The problems included a lack of support for new products and sales, squeezing supplier costs, and mismanagement of plants and products in North America, the sources said.
“If you think you know everything, you’re not going to listen to anybody else,” one source told CNBC, saying the pressure to cut costs felt like having a pistol “to your head.”
Another source said Tavares had a tendency to cast blame on U.S. executives while ignoring any of his own mistakes: “If you don’t know the market, you don’t know the customers, you can’t make the right decisions,” the person said.
Investors also had turned on the chief executive, with U.S.-traded shares of Stellantis off 43% in 2024 prior to his departure. That compares with General Motors, up 55%, and Ford Motor, off 9%, during that time frame.
Such issues ultimately led to Tavares’ resignation, with the company saying Dec. 1 that he was leaving immediately because of “different views” with Stellantis’ board. French financial newspaper Les Echos reported that Tavares’ departure was a negotiated resignation that came after the company’s board decided to terminate the executive.
The board’s actions surprised many inside and outside Stellantis, which Tavares had led since spearheading a merger in January 2021 between his French automaker, PSA Groupe, and Fiat Chrysler. Stellantis is the fourth-largest automaker in the world and owns brands such as Jeep, Dodge, Fiat, Chrysler and Peugeot.
Tavares’ departure came less than two months after the board backed him to stay through the remainder of his contract in early 2026. He also was expected to assist with the selection and transition of his successor during that time.
Stellantis said it’s now expecting to name a successor during the first half of next year. Until then, the company has established a new interim executive committee led by Chairman John Elkann, scion of Italian automaker Fiat.
Tavares, 66, was publicly viewed as a business mastermind who could ruffle a few feathers along the way but got things done in the end, as he did with drastic turnarounds of PSA Groupe and General Motors’ former Opel European operations.
A prodigy of former Nissan executive Carlos Ghosn, he was an avid proponent of cost-cutting, mergers and synergies — a trait he also shared with late Fiat Chrysler CEO Sergio Marchionne. Such traits made many believe he was one of the few executives capable of running such an automaker, but they also contributed to his downfall.
“CEOs in this industry are celebrated like Formula 1 drivers when things go right, but a single misstep can lead to a spectacular spinout,” Bernstein analysts, led by Daniel Roeska, wrote in a Friday investor note about auto company CEO exits. “Just like a F1 race, transformational leadership requires not only vision but also consensus-building among the team, a robust understanding of what the organization (or car
is capable of, and careful timing!”
Some sources said his perceived arrogance toward some U.S. hourly and salaried employees peaked this summer when Tavares — who lives in Europe and was compensated nearly $40 million last year in salary, stock and other benefits — publicly announced that he would spend time in North America for a few days to fix problems during his summer break. Such a break is a regular occurrence in Europe but not in the U.S., where sources said it rubbed some employees who don’t get a monthlong vacation the wrong way.
Meanwhile, U.S. leaders, due to the time difference, dealt with regular hourslong meetings in the middle of the night — before having to work their full U.S. day — as well as a smug sense of intellectual supremacy from Tavares and a dismissal of opinions, specifically regarding product planning, the sources said.
“When Tavares started, he said the center of the company is somewhere in the Atlantic ... but it became very clear to us that the center of the company was in France,” said a former Stellantis executive.
Several sources said executives tried multiple times to deprioritize the company’s emphasis on electric vehicles or, at the very least, launch gas-powered models before EV models to maintain sales, but Tavares was dismissive of such actions.
Sources said Tavares’ cost-cutting measures also included simplifying vehicles such as the Jeep Grand Cherokee while increasing its pricing above market norms; outsourcing critical engineering work to lower-cost countries and consultants such as France-based Capgemini; and micromanaging budgets and decisions to a point where U.S. leaders felt they had their hands tied behind their backs. A notable one included killing the automaker’s popular V-8 Hemi engines.
“Everybody wanted to keep [Hemi],” said one source. “But it was, ‘You need to be greener’” and there was little to nothing they could do to change the decision.
Those issues came even as executives said they were dealing with previously reported problems with delays in new products, cutting low-margin vehicles such as the gas-powered Jeep Cherokee and Dodge Charger and Challenger without any replacements ready, and waging battles over costs with suppliers, dealers and the United Auto Workers union, among other “arrogant” mistakes in the U.S.
“Those are areas where, I think, clearly, you know, we need to build back trust,” Stellantis Chief Financial Officer Doug Ostermann said during a UBS conference Wednesday. “I think there’s a strong desire among the management team today to really work on that. And it will take time.”
Ostermann said such problems with key stakeholders, as well as some disagreements on what Stellantis’ priorities should be during the next 15 to 16 months, were the main drivers for Tavares’ departure.
Stellantis is currently in litigation with the UAW following the union planning strike actions against the company, as well as with at least five notable suppliers, largely due to disputes over pricing and costs.
In Europe, much like the U.S., the budget cuts were excessive. For example, the Financial Times reported guests invited to a factory in the UK this year were served with drinks from a coffee machine that had been transported more than 100 miles from another plant because staff there were not allowed to buy one.
READ PART 2 HERE:
https://www.ramforum.com/threads/pa...er-with-arrogant-mistakes-sources-say.214606/
Published Tue, Dec 10 2024
Part 1:
DETROIT — “Arrogant.” It’s the word former Stellantis CEO Carlos Tavares used in June to describe mistakes that led to the automaker’s troubles in the U.S. It’s also how executives who worked with him described the automotive veteran to CNBC over the past year.
Several former or current leaders, as well as other U.S. employees with the trans-Atlantic automaker, said Tavares’ relentless focus on cost-cutting, his goal of achieving double-digit profit margins under his “Dare Forward 2030” business plan, and a reluctance, if not unwillingness, to listen to U.S. executives about the American market led to the company’s current situation and, ultimately, Tavares’ departure last week.
The sources, who agreed to speak on the condition of anonymity in order to talk freely and avoid repercussions, were interviewed at various times throughout 2024, including several last week.
They described the Portuguese-born executive as being fixated on near-term cost reductions and profits to the detriment of the business as well as to the company’s products, employees and relationships with suppliers, unions and dealers.
The problems included a lack of support for new products and sales, squeezing supplier costs, and mismanagement of plants and products in North America, the sources said.
“If you think you know everything, you’re not going to listen to anybody else,” one source told CNBC, saying the pressure to cut costs felt like having a pistol “to your head.”
Another source said Tavares had a tendency to cast blame on U.S. executives while ignoring any of his own mistakes: “If you don’t know the market, you don’t know the customers, you can’t make the right decisions,” the person said.
Investors also had turned on the chief executive, with U.S.-traded shares of Stellantis off 43% in 2024 prior to his departure. That compares with General Motors, up 55%, and Ford Motor, off 9%, during that time frame.
Such issues ultimately led to Tavares’ resignation, with the company saying Dec. 1 that he was leaving immediately because of “different views” with Stellantis’ board. French financial newspaper Les Echos reported that Tavares’ departure was a negotiated resignation that came after the company’s board decided to terminate the executive.
The board’s actions surprised many inside and outside Stellantis, which Tavares had led since spearheading a merger in January 2021 between his French automaker, PSA Groupe, and Fiat Chrysler. Stellantis is the fourth-largest automaker in the world and owns brands such as Jeep, Dodge, Fiat, Chrysler and Peugeot.
Tavares’ departure came less than two months after the board backed him to stay through the remainder of his contract in early 2026. He also was expected to assist with the selection and transition of his successor during that time.
Stellantis said it’s now expecting to name a successor during the first half of next year. Until then, the company has established a new interim executive committee led by Chairman John Elkann, scion of Italian automaker Fiat.
Tavares, 66, was publicly viewed as a business mastermind who could ruffle a few feathers along the way but got things done in the end, as he did with drastic turnarounds of PSA Groupe and General Motors’ former Opel European operations.
A prodigy of former Nissan executive Carlos Ghosn, he was an avid proponent of cost-cutting, mergers and synergies — a trait he also shared with late Fiat Chrysler CEO Sergio Marchionne. Such traits made many believe he was one of the few executives capable of running such an automaker, but they also contributed to his downfall.
“CEOs in this industry are celebrated like Formula 1 drivers when things go right, but a single misstep can lead to a spectacular spinout,” Bernstein analysts, led by Daniel Roeska, wrote in a Friday investor note about auto company CEO exits. “Just like a F1 race, transformational leadership requires not only vision but also consensus-building among the team, a robust understanding of what the organization (or car
is capable of, and careful timing!”Wrong turns
For Tavares, an avid racer who liked to spend up to one week a month at his ranch in Portugal, there were several wrong turns.Some sources said his perceived arrogance toward some U.S. hourly and salaried employees peaked this summer when Tavares — who lives in Europe and was compensated nearly $40 million last year in salary, stock and other benefits — publicly announced that he would spend time in North America for a few days to fix problems during his summer break. Such a break is a regular occurrence in Europe but not in the U.S., where sources said it rubbed some employees who don’t get a monthlong vacation the wrong way.
Meanwhile, U.S. leaders, due to the time difference, dealt with regular hourslong meetings in the middle of the night — before having to work their full U.S. day — as well as a smug sense of intellectual supremacy from Tavares and a dismissal of opinions, specifically regarding product planning, the sources said.
“When Tavares started, he said the center of the company is somewhere in the Atlantic ... but it became very clear to us that the center of the company was in France,” said a former Stellantis executive.
Several sources said executives tried multiple times to deprioritize the company’s emphasis on electric vehicles or, at the very least, launch gas-powered models before EV models to maintain sales, but Tavares was dismissive of such actions.
Sources said Tavares’ cost-cutting measures also included simplifying vehicles such as the Jeep Grand Cherokee while increasing its pricing above market norms; outsourcing critical engineering work to lower-cost countries and consultants such as France-based Capgemini; and micromanaging budgets and decisions to a point where U.S. leaders felt they had their hands tied behind their backs. A notable one included killing the automaker’s popular V-8 Hemi engines.
“Everybody wanted to keep [Hemi],” said one source. “But it was, ‘You need to be greener’” and there was little to nothing they could do to change the decision.
Those issues came even as executives said they were dealing with previously reported problems with delays in new products, cutting low-margin vehicles such as the gas-powered Jeep Cherokee and Dodge Charger and Challenger without any replacements ready, and waging battles over costs with suppliers, dealers and the United Auto Workers union, among other “arrogant” mistakes in the U.S.
“Those are areas where, I think, clearly, you know, we need to build back trust,” Stellantis Chief Financial Officer Doug Ostermann said during a UBS conference Wednesday. “I think there’s a strong desire among the management team today to really work on that. And it will take time.”
Ostermann said such problems with key stakeholders, as well as some disagreements on what Stellantis’ priorities should be during the next 15 to 16 months, were the main drivers for Tavares’ departure.
Stellantis is currently in litigation with the UAW following the union planning strike actions against the company, as well as with at least five notable suppliers, largely due to disputes over pricing and costs.
In Europe, much like the U.S., the budget cuts were excessive. For example, the Financial Times reported guests invited to a factory in the UK this year were served with drinks from a coffee machine that had been transported more than 100 miles from another plant because staff there were not allowed to buy one.
Mismanagement of U.S. operations
The mismanagement of U.S. operations led to Stellantis having bloated new vehicle inventories compared with its peers, slashing plant production, undergoing significant head-count reductions and pricing many of its traditional consumers out of the market for its crucial Ram, Jeep and Dodge brands.READ PART 2 HERE:
https://www.ramforum.com/threads/pa...er-with-arrogant-mistakes-sources-say.214606/
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