Business
Stellantis swiftly reshapes strategy under Elkann after Tavares exit
Global Banking & Finance Review®
Company
By Giulio Piovaccari and Nora Eckert
MILAN/DETROIT (Reuters) – Steered by Chairman John Elkann, Stellantis, owner of 14 brands including Fiat, Jeep and Ram, is acting swiftly to dismantle the legacy of its former CEO and repair relations with dealers, industry partners, governments and workers.
Carlos Tavares abruptly resigned on Dec. 1, almost 18 months before the expiry of his contract, as a rift widened between the board and main shareholders of the world’s fourth-largest carmaker.
While it seeks a new CEO, Stellantis is being run by an interim executive committee, chaired by Elkann.
Having warned on profits at the end of September and facing a bloated inventory, Stellantis cannot afford to drift under its temporary leadership.
Elkann, 48, is the scion of the Agnelli family that founded Italian carmaker Fiat more than a century ago. He also chairs Ferrari and runs the Exor Agnelli family holding.
The new approach will be tested on Tuesday, when the automaker’s representatives meet Italian Industry Minister Adolfo Urso and local unions to try to agree a long-term plan for production in Italy.
The company – the country’s sole major automaker – may pledge to expand output and protect jobs in return for improved manufacturing conditions and government support for the industry’s electric transition, easing tensions with Rome.
A Stellantis source, speaking on condition of anonymity, said it was the right time to sign a deal.
Less than a week after the CEO quit, Stellantis said it would rejoin European auto lobby group ACEA. It left at the beginning of 2023 based on a decision by Tavares, who opted for an independent lobbying strategy without consulting the board, according to a second source.
The carmaker plans to align itself with the group’s proposals, Stellantis’ Europe Chief Jean-Philippe Imparato said last week.
Tavares had opposed a call by ACEA for relief on intermediate targets on the European Union’s carbon reduction targets under which carmakers risk multi-billion euro fines.
His position was not backed by associations of Stellantis European dealers, who supported the ACEA proposal.
But in a meeting of Stellantis European retailers, held in Amsterdam days after Tavares’ resignation, Imparato was the main guest and the mood was relaxed.
“The cooperation with Stellantis … is strong, and we are confident that we can face future challenges with our partner,” the dealers said in a statement.
Alberto Di Tanno, the chairman of Italian dealership group Intergea said it was too soon to see concrete changes but that he was confident.
“It looks like the company wants to present itself as less centralised, and give more autonomy to its country structures, including in relations with the dealers,” he said.
Tavares, an industry veteran who had led Stellantis since its creation in 2021 through the merger of PSA and Fiat-Chrysler, had been feted for increasing operating margins.
However, dealers on both sides of the Atlantic complained that rising prices for its mass-market marques ultimately lost it the support of inflation-hit customers.
Stellantis this month swiftly re-hired retired executive Timothy Kuniskis to lead Ram, one of its most important brands.
Industry analysts have interpreted the decision as a step to improve relations with dealers in the U.S., the group’s profit powerhouse, and reverse Ram’s U.S. sales, which were down 24% this year as of the end of the third quarter.
Kevin Farrish, leader of Stellantis’ dealer council, said Elkann met with their executive board in the U.S. in early December to discuss how the automaker could repair its relationship with the dealers.
Elkann said Antonio Filosa, appointed chief of North American operations in October, would have the authority to respond to market conditions, Farrish said.
“It meant a great deal to us,” he said in a message. “We have a ton of opportunities to fix what Mr. Tavares harmed.”
Santosh Viswanathan, who owns a Stellantis dealership in Delaware, said Elkann’s early actions were promising, though there was a lot of work to do.
“The dealer body, which is your distribution channel, has been left in tatters,” Viswanathan said.
“Right now, drastic times require drastic measures.”
After sinking to their lowest since July 2022 on Dec. 2, following news of Tavares resignation, Stellantis shares have rebounded by over 18%, after having fallen more than 40% since the beginning of the year.
Andrea Scauri, a Swiss-based fund manager at Lemanik, who rebuilt a small Stellantis stake last week, said the whole automotive industry will benefit from a softer EU approach on carbon emission rules, including on potential fines on 2025 intermediate targets.
“Tavares denied this was a problem,” Scauri said.
“Acknowledging there can be risks and having more constructive relations with politics, at a national and EU level, should help Stellantis.”
A third source, who like the others spoke on condition of anonymity because they were not authorised to speak publicly on the issues, said Elkann was devoting most of his time to Stellantis.
The source also said Elkann had opted for an interim executive team, rather than taking the interim-CEO position as he had done when Ferrari was left without a CEO in late 2020.
“His idea was to have a more collegial management during this phase, with increased focus on top executives, their role and their skills, compared to the previous one-man-only style under Tavares,” the source said.
(Reporting by Giulio Piovaccari in Milan and Nora Eckert in Detroit; Additional reporting by Gilles Guillaume in Paris and Alessandro Parodi in Gdansk; Editing by Keith Weir and Barbara Lewis)
Corporate strategy refers to the overall plan and direction a company takes to achieve its goals and objectives, including decisions on resource allocation, business operations, and market positioning.
The automotive industry encompasses the design, development, manufacturing, marketing, and selling of motor vehicles, including cars, trucks, and motorcycles.
Investment is the process of allocating resources, usually money, in order to generate income or profit. It can involve purchasing assets like stocks, bonds, or real estate.
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