Stellantis Changes Leadership and Strategy
By Giulio Piovaccari and Nora Eckert
MILAN/DETROIT (Reuters) – Under the direction of Chairman John Elkann, Stellantis (NYSE:STLA), which owns brands like Fiat, Jeep, and Ram, is quickly working to remove the legacy of its former CEO and mend relations with dealers, industry partners, governments, and workers.
Carlos Tavares resigned on December 1, nearly 18 months before his contract was set to expire, amid growing tensions between the board and major shareholders of the world's fourth-largest carmaker.
While in search of a new CEO, Stellantis is currently managed by an interim executive committee led by Elkann.
After cautioning about profitability at the end of September and facing excessive inventory, Stellantis cannot afford to remain stagnant with temporary leadership.
Elkann, 48, is part of the Agnelli family that founded Fiat over a century ago. He also chairs Ferrari (NYSE:RACE) and oversees Exor (AS:EXOR), the Agnelli family holding company.
This new strategy will face a key test on Tuesday when the automaker’s representatives meet with Italian Industry Minister Adolfo Urso and local unions to work on a long-term production plan in Italy.
As the only major automaker in the country, Stellantis may commit to increasing output and preserving jobs in exchange for better manufacturing conditions and governmental support for the transition to electric vehicles, aiming to ease tensions with the Italian government.
A confidential source from Stellantis indicated that this is an opportune moment for a deal.
REJOINING LOBBY GROUP
Less than a week after Tavares' departure, Stellantis announced it would rejoin the European auto lobby group ACEA (BIT:ACE). It had left in early 2023 based on Tavares’ independent lobbying strategy that was made without board consultation, as reported by a second source.
Stellantis intends to align itself with ACEA's proposals, according to Stellantis Europe Chief Jean-Philippe Imparato.
Tavares had opposed ACEA’s appeal for relief on EU’s burgeoning carbon reduction targets, under which automakers risk considerable fines.
His view was not supported by Stellantis' European dealers, who backed the ACEA proposal.
In a meeting with Stellantis European retailers in Amsterdam shortly after Tavares' resignation, Imparato was a primary invitee and the atmosphere was positive.
Dealers expressed confidence, stating, “The cooperation with Stellantis … is strong, and we are optimistic about future challenges with our partner.”
Chairman of Italian dealership group Intergea, Alberto Di Tanno, stated that while it’s too early to see significant changes, he feels optimistic about the direction.
REPAIRING RELATIONS
Tavares, an industry veteran who led Stellantis since its formation in 2021 through the merger of PSA and Fiat-Chrysler, had been recognized for enhancing operating margins.
However, dealers across North America and Europe criticized rising prices for mass-market brands, ultimately alienating customers amid inflation.
This month, Stellantis quickly re-hired retired executive Timothy Kuniskis to oversee Ram, one of its key brands.
Analysts see this move as a way to mend relations with U.S. dealers, as Ram sales had dropped by 24% by the end of the third quarter.
Kevin Farrish, leader of Stellantis' dealer council, mentioned that Elkann met with the U.S. executive board in early December to discuss repairing dealer relationships.
Elkann confirmed that Antonio Filosa, appointed as head of North American operations in October, would be empowered to react to market changes, Farrish reported.
“This meant a great deal to us,” Farrish remarked, believing many opportunities lie ahead to mend what Tavares affected negatively.
Santosh Viswanathan, a Stellantis dealer in Delaware, mentioned that while Elkann’s swift actions seem promising, there is significant work to accomplish.
“The dealer body, which is your distribution channel, has been left in tatters,” Viswanathan commented. “Right now, drastic times require drastic measures.”
ELKANN'S STEADYING INFLUENCE
Stellantis shares dropped to their lowest since July 2022 on December 2, following Tavares' resignation news, but have since rebound by over 18%, having fallen 40% since the year's start.
Andrea Scauri, a Swiss fund manager at Lemanik, who recently rebuilt a minor Stellantis stake, noted the automotive industry could benefit from a more lenient EU approach on carbon emission rules.
“Tavares denied this was a problem,” Scauri stated. “Recognizing potential risks and fostering constructive relationships with politics at both the national and EU level should assist Stellantis.”
A third source, who remained anonymous due to the sensitive nature of the situation, stated that Elkann is focusing much of his time on Stellantis.
The source also mentioned Elkann chose an interim executive team instead of stepping in as interim CEO, preferring a more collaborative management style compared to Tavares' solitary leadership approach.
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