Stellantis CEO Carlos Tavares expressed dissatisfaction at the operation of some US plants this week and took responsibility for not reacting quickly enough to address that issue, the problem of inventory backup, and tackling a ‘suboptimal’ marketing strategy
Stellantis chief executive Carlos Tavares voiced his dissatisfaction with the performance of some US plants this week, admitting he should have acted sooner to address issues including inventory backlog and a “suboptimal” marketing strategy.
Tavares confessed that these three problems, which arose as the company grappled with reduced shipments and revenues, were not addressed promptly due to arrogance. “When I am saying we were arrogant, I’m talking about myself, nobody else. I’m talking about the fact that I should have acted immediately, recognizing that the convergence of those three problems was there, and we had to set up a task force to address them,” Tavares told an investor conference in Auburn Hills, Michigan.
“If you have a marketing strategy that is suboptimal, at the moment when your inventory grows and your plants start having problems, you think that you can fix each of the issues in isolation, but if the three things happen at the same time, it is more difficult,” he acknowledged.
He revealed that the inefficiencies of the plants in terms of supply, quality and costs became apparent in autumn 2023 as market conditions worsened while the carmaker and its US rivals were engaged in talks with the United Autoworkers Union.
Meanwhile, he revealed that issues at two unnamed US plants are being addressed. “It is not rocket science. It is something we have done tons of times, everywhere in the world,” he said, emphasising the need to resolve the problem “in the context of the U.S environment.
Stellantis, the manufacturer of Jeeps and Ram pickup trucks, has been facing difficulties, with global shipments in the first quarter dropping 10% from a year earlier to 1.34 million, and revenues falling 12% to 41.7 billion euros ($44.8billion). Sales in the US, a significant source of revenue, were down 14%, as the market share dropped to 7.7%, the lowest in years.
The carmaker, which was established in 2001 following the merger of Fiat-Chrysler with PSA-Peugeot, replaced the North American chief operating officer with Carlos Zarlenga, former president of Stellantis Mexico, in February. Tavares expressed confidence in the company’s multi-energy platform strategy, including fully electric and plug-in gas-electric hybrids, to boost Stellantis’ competitiveness against the rapid Chinese electric vehicle offensive, which he admitted has been faster than anticipated.
However, he noted the challenge posed by vastly different government policies on electric vehicles even within the European Union, resulting in varying market shares – 2% in Italy, 15% in France and 40% in Scandinavia. Despite these challenges, Tavares affirmed that the world’s fourth-largest carmaker would “fight to stay competitive” rather than depend on tariffs for protection.”
“We are a global company, we are exposed all over the world, in Latin America, the Middle East, in Asia, to the harshest Chinese competition. So we are going to fight to be as competitive as we should be, in the performance of the product, in the range, in the affordability,” he said.
Stellantis has a 51% stake in Chinese electric vehicle startup Leapmotor which will begin selling EVs in nine European countries later this year.
