Carlos Tavares, a self-described “performance psychopath” who powered auto giant Stellantis with aggressive cost-cutting and high car prices, reached the end of the road as CEO when his strategy hit a dead end.
Tavares pulled off one of the most ambitious mergers in automotive history in 2021 when more than a dozen brands, including Jeep, Fiat, Chrysler, Peugeot and Citroen, were brought under one roof.
The Portuguese executive, who at the time headed the French group Peugeot-Citroen, was appointed CEO of the newly created French-Italian-American behemoth called Stellantis.
His three-year tenure was marked by high profit margins that were the envy of his auto industry rivals, but the good times ended this year as sales plummeted in the United States, the group’s main market.
Stellantis announced his abrupt departure on Sunday evening in a statement that hinted at tensions in the boardroom.
Henri de Castries, an independent director on Stellantis’ board, said in the statement that “different views have emerged in recent weeks” leading to the decision.
The 66-year-old Tavares brought to Stellantis the same strategy he enforced at Peugeot-Citroën, which he has led since 2014 when he took over at the French car group.
He was demanding of his teams and his cost management included job cuts, plant closures and tough negotiations that irritated parts suppliers.
Tavares advocated a “price power” strategy for Stellantis brands, putting high prices on models and ending discounts that squeezed margins.
After a string of record quarterly figures, Stellantis cut its annual profit outlook at the end of September, citing a “deterioration” in the global auto sector and problems in the US market.
The situation with Dodge cars and Ram trucks was particularly worrying for Stellantis executives and the financial markets, with new vehicles piling up at dealerships as high prices and quality problems turned away customers.
– Stellantis ‘pressed’ –
In Europe, the Fiat, Citroen and Maserati brands were punished by the late arrival of new models, sometimes due to software problems.
“This is the end of the road for the cost-cutting strategy,” said German auto analyst Matthias Schmidt.
“All the juice has been squeezed out” in what has become a “very weak market” that refuses to return to pre-coronavirus levels.
Stellantis, like Volkswagen, also tried to produce as many models as possible on the same platform.
But customers of premium brands such as DS, Alfa Romeo or Jeep were increasingly unwilling to pay a premium price for cars that were not much different from mass-market Stellantis brands.
