by Giulio Piovaccari and Gilles Guillaume
MILAN/PARIS (Reuters) – Goals deemed unrealistic or destructive by some board members led to the sudden downfall of Stellantis chief executive Carlos Tavares, who had received their full support only a month earlier, Stellantis CEO Carlos Tavares told Reuters two sources familiar with the subject.
Dissatisfied with his aggressive sales and cost-cutting targets, as well as his conflicting relationships with suppliers, dealers and unions, the board of directors of the auto giant unanimously wanted Carlos to leave. Tavares, people said.
“Something broke in November,” one said.
Carlos Tavares resigned on Sunday, leading to a fall in shares of the world’s fourth largest automaker, which owns the Peugeot, Fiat and Jeep brands, among others.
Details of the disagreements that led to his ouster have not previously been revealed.
Carlos Tavares did not respond to requests for comment. Stellantis did not wish to comment further.
On Sunday, independent director Henri de Castries said in a statement that differences of opinion had emerged in recent weeks between the CEO, the main shareholders and the board of directors.
The general director, who does not mince his words, received compensation of 36.5 million euros at the start of the year based on Stellantis’ results for 2023.
He annoyed some board members in October at the Paris auto show by publicly blaming the automaker’s U.S. management for falling sales and rising inventories in that market, the company said. ‘one of the sources. The board, however, continued to support him.
In November, however, Carlos Tavares’ brash style led to a “totally untenable” relationship with the board, whose members represent major shareholders Exor, the Peugeot family and the French government, the other source said .
When board members began to ask more specific questions about the executive’s strategies, Carlos Tavares’ reaction was: “You’re not interfering in my work, it’s none of your business.” “.
The members of the board of directors, irritated, continued to insist with Carlos Tavares, according to the source.
They were unsettled by what they saw as the chief executive’s relentless drive to cut costs, which led to supply disruptions and angered dealers. These issues had been overlooked in previous years, when Stellantis was making double-digit profit margins.
This and other issues are now causing angst within the auto giant as Carlos Tavares grapples with dealers, unions, suppliers and governments – and now members of the board of directors.
“We can’t make enemies of everyone,” said the same source.
SURPRISE EVISION
The conflicts led the board to oust its chief executive, with no one to replace him. This turnaround constitutes a big surprise, breaking with the plan which provided for a smooth succession and the retirement of Carlos Tavares in 2026.
Chairman John Elkann declared on October 10 that the board of directors was “unanimous in its support for Carlos Tavares”, even though the company got rid of its financial director and its head for North America on the same day .
Stellantis is now looking for a new CEO, who will have many tasks to tackle: stabilizing a global company with 14 brands, bloated U.S. inventories and declining U.S. and European market shares.
The group will also have to deal with the rise of Chinese rivals in electric vehicles, new European emissions standards and trade policies defended by the president-elect of the United States, Donald Trump.
Stellantis issued a major earnings warning at the end of September, which undermined Carlos Tavares’ reputation as an industry leader in maximizing profit margins and shareholder returns.
Brokers, industry experts and customers say the company has priced itself out of the market in the United States and Europe.
Shares of Stellantis are down 43% year to date.
Throughout his tenure at PSA, the maker of Peugeot, and then at Stellantis – created in 2021 during the merger of Peugeot and Fiat Chrysler – Carlos Tavares was known for his very vertical management style.
But in November, board members felt compelled to confront Carlos Tavares, one of the sources said.
“There we said to ourselves that we had to act,” said this person.
FIGHT AGAINST UNIONS, SUPPLIERS, THEN MANAGERS
According to a source, the first signs of tension between Carlos Tavares and the board have emerged in recent weeks over how to deal with European Union rules, which will impose heavy fines if EVs do not represent less 21% of Stellantis sales in 2025.
This represents a jump from the 12% EV growth recorded so far this year by the automaker.
Carlos Tavares refused to support the auto industry’s lobbying efforts to renegotiate the rules, saying instead that Stellantis would simply work to avoid fines.
The board was concerned the company would have to “massively decrease” sales of combustion-engine cars to meet the regulatory target, one of the sources said.
Company staff were “totally confused” by the “irrationality” of the idea that Stellantis could achieve such a large increase in EV share without incurring fines, this person said, leading prompted the board of directors to question Carlos Tavares.
Both sources used the term “radical” to describe Carlos Tavares’ sales goals.
Carlos Tavares also outlined other controversial plans at board meetings in November, saying he wanted to slash costs in Europe, which had already been “cut to the essentials”, a source said.
According to the same source, Carlos Tavares also proposed a liquidity management policy focused on 2024 at the expense of 2025 cash flows. This could have exposed Stellantis to another profit warning in the future, the second source said .
Board members were also angered by Carlos Tavares’ often contentious relationships with key players in what one source described as the “ecosystem” surrounding Stellantis, including tensions with “suppliers, dealers, consumers”, the Italian and French governments, and American unions.
According to this source, Carlos Tavares sometimes viewed suppliers as expendable as part of his cost-cutting policy, while board members worried that replacing trusted parts makers was not an option. rapid and caused disruption.
“You can’t just say ‘you’re out’ to your legacy suppliers,” said the source, who believes that “that puts your very ability to produce cars at risk.”
(Reporting Guilio Piovaccari and Gilles Guillaume, written by Nick Carey; Florence Loève; edited by Augustin Turpin)
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