UPDATE: Stellantis initiates search for successor to CEO Carlos Tavares, Bloomberg News reports
Post Updated 5:38 PM 9/23/24
https://www.msn.com/en-us/money/com...tp&cvid=298aa3dcc9324fa38e1d3f3d6f63c6a5&ei=7
Reuters
By Nora Eckert and Giulio Piovaccari
DETROIT/MILAN (Reuters) - Stellantis is searching for CEO Carlos Tavares' successor, the company said Monday, after the Chrysler parent laid out a plan to strengthen North America operations by slashing bloated inventories and cutting vehicle prices.
Stellantis said it was normal to initiate a search for Tavares' replacement in anticipation of his contract expiring in January 2026, and it remained possible Tavares will stay after that.
Tavares, who has run Stellantis since its creation in early 2021, has made it one of the most profitable groups in the industry. Still, he has been pressured recently to correct the automaker's struggling North American operations, whose record falls in sales and profit have sent its share price tumbling.
A source close to Stellantis Chair John Elkann, who is also the largest shareholder through Agnelli family holding company EXOR, said recent events did not trigger a search for a replacement. Rather, it reflected that finding a new CEO will be a long, complicated process.
EXOR declined to comment.
Bloomberg earlier reported that Stellantis was beginning the search for Tavares' replacement.
The automaker aims to cut 100,000 vehicles from its U.S. inventories by the start of next year, and has already reduced about 40,000 units in July and August, Chief Financial Officer Natalie Knight said at a BofA Securities virtual conference.
“We are living in very difficult times where there are going to be winners and losers, and a lot about being the winner is being the last man standing," Knight said, adding discipline on pricing and inventory would be a core part of the automaker's strategy to weather the bumpy transition to electric vehicles.
The Jeep manufacturer is under pressure from shareholders, dealers and its unionized workforce to turn around falling sales, profits and a slumping share price.
It faces a potential strike from the United Auto Workers union in the U.S., where local Stellantis chapters have started laying the groundwork for a nationwide walkout.
“When times are tough, you get friction everywhere," Knight said, adding she wanted investors to see 2024 as a transitional year, not the new normal for the Franco-Italian group.
Stellantis this year said the group's total inventories amounted to around 1.4 million vehicles at the end of the first half, when its adjusted operating profit fell 40% due to a soft performance in North America, its profit powerhouse.
Tavares visited the U.S. last month with a mission to create a plan to reverse lagging operations. The Stellantis CEO has led an aggressive cost-cutting strategy, resulting in reductions of salaried and factory workers. Knight said executives will continue to restructure the group's business over the coming years.
The automaker will strive to source 80% of its supply from low-cost countries by 2028, Knight said, an effort she said would significantly reduce overall expenses.
It has also slashed prices on some vehicles including the Jeep Grand Cherokee and Jeep Compass, Knight said.
While Knight acknowledged the first half of the year has been difficult for the carmaker, she said conditions were expected to improve through the end of 2024. The automaker still expects sales of new models to contribute 15-20% of revenues in the second half of this year, Knight said.
(Reporting by Giulio Piovaccari in Milan and Nora Eckert in Detroit; Additional reporting by Nathan Gomes in Bengaluru; Editing by Gavin Jones, Tomasz Janowski, Nick Zieminski and David Gregorio)
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