From CNBC: 2024-12-10 06:00:01

Carlos Tavares, former CEO of Stellantis, faced criticism for his focus on cost-cutting and double-digit profit margins. His departure came after pressure to cut costs led to a lack of new products, mismanagement, and a drop in stock value. Tavares’ resignation was a negotiated agreement due to differences with the board.

Tavares, a master of turnarounds, was known for his cost-cutting strategies and mergers. Despite his successes, his relentless focus on cost reduction led to his downfall. The former Nissan executive was viewed as a business prodigy, but his unwillingness to listen to U.S. executives and prioritize near-term profits caused issues at Stellantis.

Tavares’ resignation came after the board initially supported him to stay through 2026. Stellantis is now looking to name a successor by the first half of next year. With Tavares gone, an interim executive committee has been established, led by Chairman John Elkann. Tavares’ departure was surprising to many, given his success in steering the merger between PSA Groupe and Fiat Chrysler.

The former CEO’s tendency to dismiss opinions and his focus on cost-cutting strategies led to his departure. His arrogance, disregard for U.S. employees’ concerns, and lack of support for new products contributed to the issues at Stellantis. Tavares’ resignation was a negotiated agreement, following the board’s decision to terminate him. Former Stellantis executive revealed the company’s center was in France, with Tavares dismissing suggestions to prioritize gas-powered models over EVs, cutting costs by simplifying vehicles, outsourcing engineering work, and micromanaging budgets, angering U.S. leaders. Stock prices slumped due to delays, discontinued models, disputes with stakeholders, and arrogant mistakes in the U.S.

Mismanagement in the U.S. led to bloated inventories, slashed production, job cuts, and alienated traditional consumers. Executives cited Tavares’ dismissal of input not aligning with growth goals, oversaw budget cuts, and stifled brand CEOs. An exodus of executives occurred, with Tavares brushing off budget cuts as the cause of U.S. issues.

Tavares’ successor must mend relationships with stakeholders, as Stellantis cut employee head count by 14%, or 40,600 employees, between 2020 and 2023, including 15% reductions in Europe and North America. The company faces litigations with the UAW and suppliers, as well as a need to rebuild trust and address past mistakes to move forward successfully. Stellantis CEO Tavares steps down, UAW and dealers approve. UAW President Fain calls it a positive change, while U.S. dealers are optimistic about new leadership. Elkann and Filosa meet with U.S. dealership council to discuss future plans. Elkann emphasizes confidence in moving forward with new leadership.

Elkann swiftly manages fallout from Tavares’ departure in major markets. Elkann notifies Italian PM Meloni before Tavares resigns. Global tour of Stellantis sites to address recent head-count reductions and production cuts. Elkann remains optimistic about finishing 2024 and looks forward to a better 2025.

Stellantis faces questions about reviewing Tavares’ decisions. Uncertainty around past choices like closing Arizona Proving Grounds. Company ends cost-cutting program named “Darwin” to ensure survival. Elkann signals shift from previous Darwinian approach to a more strategic vision for the company’s future.



Read more at CNBC: Stellantis CEO Carlos Tavares lost control of the automaker, sources say