Stellantis, the fourth-largest car manufacturer in the world, is undergoing significant changes in response to recent challenges and declining profits.
CEO Carlos Tavares is preparing to implement a major management overhaul following a profit warning that has caught the attention of investors and industry experts alike. This move comes as the automaker faces difficulties, particularly in its North American operations.
Stellantis Undergoes Management Overhaul
Stellantis has been experiencing a significant decline in sales and profits, which has caused its share prices to drop sharply. The automaker has seen a decline in global demand and is grappling with excess inventory.
This situation has been made worse by fierce competition from Chinese automakers that are gaining ground in the market.
In the United States, Stellantis has had to reduce prices on some of its popular models, including high-margin Jeeps and pickup trucks, to attract buyers. This price reduction is a direct response to the dwindling demand for these vehicles.
Just last week, Stellantis revised its profit forecast for 2024 downwards and warned that it would spend more cash than previously expected. The company is committed to scaling back production and providing significant discounts to improve its operations in the US.
According to Reuters, Tavares is expected to present his management proposal during an important board meeting in the US this week. This meeting is crucial as it will address not only the management shake-up but also the CEO's future with the company.
Tavares's contract is set to end in 2026, and there is ongoing speculation about who might succeed him. Although Stellantis is searching for a potential successor, the company has hinted that Tavares may continue his role for some time.
During the upcoming two-day meeting, Tavares is anticipated to discuss potential cuts affecting various teams within Stellantis, including finance teams, regional leaders, and brand executives.
The goal is to address the issues plaguing the company and to implement effective turnaround strategies in North America, which is recognized as Stellantis' largest profit source.
Stellantis Faces Ongoing Challenges
Stellantis' shares have shown signs of recovery, increasing by up to 3.2% after the announcement of Tavares's proposed changes. However, the company's stock has experienced a decline of approximately 42% this year, indicating the ongoing struggles it faces, according to Bloomberg.
The challenges for Stellantis are multifaceted. The manufacturer, known for popular brands like Jeep and Dodge, is not only dealing with excess inventory but also notable executive departures and declining sales.
Chairman John Elkann, who is also the CEO of Exor NV—the largest stakeholder in Stellantis—has expressed growing discontent regarding the situation in North America.
Despite the difficulties, Tavares is known for his frugal management style and is committed to regaining control over the company's operations. Following his presentation to the board, he will travel to Italy to address concerns about the decline in auto production within the country during a parliamentary hearing.
During a recent visit to a Stellantis plant in Sochaux, France, Tavares affirmed his commitment to the company and insisted that the current challenges would not jeopardize his strategic plans.
He emphasized that addressing these issues is crucial for the future of Stellantis and that he remains determined to steer the company back to success.
