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Stellantis CEO Carlos Tavares lost control of the automaker with 'arrogant' mistakes, sources say
Story by Michael Wayland9 min read
PART 2:
We were arrogant. No excuse,” Tavares said during a June investor event, citing problems with some U.S. plants and his own lack of action to alter business plans amid changing market conditions.
Three executives or top-line managers said Tavares many times dismissed any input that didn’t meet goals in his “Dare Forward 2030” plan, which included doubling net revenues and sustaining double-digit adjusted operating income, or AOI, margins through this decade, led by EVs.
Stellantis’ Ostermann said the company’s board and Tavares didn’t necessarily disagree over long-term plans, but he declined to reconfirm the company’s plans for double-digit AOI. “Whether or not the environment going forward, if double digit is the right number or not, we’ll have to see,” Ostermann said Wednesday.
Tavares also put a level of bureaucracy and budgeting over brand CEOs who had previously had more free range and trust from Fiat Chrysler’s Marchionne to do their jobs, the sources told CNBC.
Such issues led to an exodus of executives, such as Tim Kuniskis, a prior Swiss Army knife for the automaker, who this week returned to the company; global Jeep head Christian Meunier; longtime Jeep North America executive Jim Morrison; and newer leaders, such as Mamatha Chamarthi, who headed the automaker’s software business development, and Chief Financial Officer Natalie Knight. Stellantis North America head Mark Stewart left the company in January to become CEO of Goodyear Tire and Rubber Co.
Other executives, such as Chief Technology Officer Ned Curic, who remains with the automaker and was named last week to its interim executive committee, in June told CNBC that Tavares’ cost cuts were difficult but effective.
But others in the company weren’t so sure, describing the cuts around that time as grueling to the point of excessiveness and leading to the problems in the U.S.
Tavares, when asked in July about the cuts being responsible for the company’s U.S. problems, said that was categorically false.
“The narrative about the budget cuts is wrong. ... What is requested to the local team is profit, share and customer satisfaction,” Tavares said in July. “When you don’t deliver for any reason ... you may want to use a scapegoat. The budget cut is an easy one. It’s wrong.”
Competitors, consciously or not, also tried to distance themselves from what Stellantis was doing.
GM President Mark Reuss, when discussing the automaker’s own cuts in October, noted that companies aren’t able to cut to growth.
“It’s been said time and again you can’t cut your way to growth. No way,” he said during GM’s investor day in October. “You have to make things that people want, that people must have. We are doing both and we are set up for success over the long haul.”
Damage control
Whoever succeeds Tavares will need to continue to reconcile relationships with suppliers, hourly and salaried U.S. employees, dealers and politicians.Stellantis has reduced employee head count by 14%, or roughly 40,600 employees, between 2020 and the end of 2023, including roughly 15% reductions in the enlarged Europe North America region, according to public filings. That doesn’t include further head-count reductions and layoffs in 2024.
UAW President Shawn Fain, who has been calling for Tavares’ firing for months, applauded the chief executive’s departure, calling it “a major step in the right direction for a company that has been mismanaged and a workforce that has been mistreated for too long.”
U.S. dealers also had been frustrated, but were growing more optimistic given recent changes even before Tavares’ departure.
The head of Stellantis’ U.S. dealer council, Kevin Farrish, commended the company for its recent efforts to support dealers, specifically newly appointed North American Chief Operating Officer Antonio Filosa.
Filosa and Elkann, Stellantis’ chair, were part of a meeting Monday with the Stellantis U.S. dealership council, Farrish confirmed.
“Antonio’s hitting the ground running,” Farrish, who slammed Tavares in September, told CNBC on Friday. “We have a great deal of confidence in Antonio, and we look forward to working with him. ... It’s very optimistic to see this much action happening.”
Meanwhile, damage control surrounding Tavares’ departure was swift, especially in the U.S. and Italy — major markets for the company’s operations and previous headquarters of the former Chrysler and Fiat automakers.
Bloomberg News reported that Elkann alerted Italian Prime Minister Giorgia Meloni prior to Tavares’ resignation. The move came after Stellantis had made significant head-count reductions and production cuts in the country.
Elkann last week also took part in a global tour of Stellantis’ sites in the U.S., Italy and France. A source who attended a leadership meeting last week at the automaker’s sprawling North American headquarters in suburban Detroit said Elkann focused on finishing 2024 and optimism that 2025 would be a better year for the company.
Stellantis did not immediately respond to requests for comment on the visits, including whether the company intends to review Tavares’ past decisions, such as closing and selling the company’s Arizona Proving Grounds.
The source who attended the U.S. town hall said Elkann made no indication of revisiting any decisions. However, they confirmed the company has ended a surgical cost-cutting program internally named “Darwin” — a nod to Tavares saying the auto industry was in a Darwinian period, in which only the strongest survive.
“Darwin is dead because we intend to survive,” Elkann said, according to the source.
https://www.cnbc.com/2024/12/10/ste...ost-control-of-the-automaker-sources-say.html
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