Stellantis CEO's Cuts Cost Him Job --- Tavares's abrupt exit came amid concerns over efficiency drive

"A ruthless focus on efficiency made Carlos Tavares a giant of the automotive industry. It was also his undoing at Stellantis.

Tavares resigned Sunday as chief executive officer of the Chrysler owner after losing the confidence of the board and key shareholders. In a statement, the company pointed to the emergence of "different views" in recent weeks.

The leadership change caps a dramatic fall from grace for a company that Tavares created through a blockbuster 2021 merger and turned into a profit powerhouse during the pandemic. This year, a drop in sales has led to mounting inventories and a sharp fall in the company's share price. Stellantis stock fell 6.3% Monday.

Despite the challenges, Stellantis's board had given Tavares its unanimous backing to turn the automaker around as recently as October.

Since then, his renewed pursuit of cost savings and other efficiencies inflamed already fractious relations with dealers, suppliers and politicians, according to people familiar with the matter, prompting concern among board members.

"The machine was being driven too aggressively," one of the people said.

One focus for Tavares was ensuring that the company beat its cash-flow guidance for the year, according to some of the people familiar with the matter. This would involve delaying payments to parts suppliers, bringing a cash windfall this year at the expense of 2025, while also putting stress on key business partners, the people said.

The board worried that the move would risk long-term relationships with suppliers on which the company depends, the people said. The board also became increasingly concerned about Tavares's handling of unions and politicians in its home countries, the people added.

In Italy, Stellantis has repeatedly paused production this year, leading to the first national auto workers' strike in two decades. In testimony to the Italian Parliament in October, Tavares blamed the country's high production costs and a lack of consumer incentives for buying electric vehicles.

In France, Tavares previously came under political attack for his high pay, in an echo of the controversies that surrounded his disgraced former mentor Carlos Ghosn.

By the second half of November, it became clear to the board that it didn't share Tavares's view of how to fix Stellantis, the people familiar with the matter said.

Stellantis declined to comment further on the rationale for Tavares's departure. Tavares couldn't be reached.

The auto giant plans to appoint a permanent CEO sometime in the first half of 2025. Until then, the company has established an interim executive committee, led by Chairman John Elkann, to handle Tavares's duties.

Elkann runs Exor, the investment vehicle that is the largest shareholder of both Stellantis and Italian sports-car maker Ferrari. Elkann has flown to Michigan, where Stellantis is based in North America, for discussions this week about the company's future direction, people familiar with the situation said.

"The board believes the focus for our company and stakeholders needs to be on the long term," Elkann wrote Monday in an email to Stellantis employees. The email was reviewed by The Wall Street Journal.

The CEO change comes as Stellantis contends with challenges in its two largest markets.

In the U.S., which contributes the bulk of its profit, Stellantis came under fire from dealers this year for "disastrous choices" that inflated inventories, such as a reluctance to lower prices as consumers became more cautious. There have been some early signs of success in turning the situation around, with market share inching higher in recent months, though it remains far below prepandemic levels.

Stellantis has also clashed with the United Auto Workers union, whose leader, Shawn Fain, welcomed Tavares's departure in a statement Monday.

Kevin Farrish, chairman of the automaker's U.S. dealer advisory council, said he met earlier Monday with Elkann and North American head Antonio Filosa.

"It was a huge sign of respect to the American dealers," he said. The company has helped dealers reduce inventory over the last few months and brought pricing on its models more in line with the overall market, he said.

Tavares was instrumental in the creation of Stellantis, which was forged by the merger of Peugeot owner PSA Group of France and the Italian-American company once known as Fiat Chrysler Automobiles.

The Portuguese executive had already garnered a reputation for cutting costs through business combinations." [1]

He tried to cut all expenses except his own salary.

1. Stellantis CEO's Cuts Cost Him Job --- Tavares's abrupt exit came amid concerns over efficiency drive. Wilmot, Stephen; Felton, Ryan.  Wall Street Journal, Eastern edition; New York, N.Y.. 03 Dec 2024: B.1.