Inside Stellantis’s peace mission to defuse wrath at Tavares

Stellantis is mending fences in the aftermath of the stormy leadership of Carlos Tavares, which delivered incredible profits but also badly damaged relationships with unions, dealers, politicians and suppliers. “Those are areas where clearly I think we need to build back trust,” Stellantis chief financial officer Doug Ostermann told a banking conference in December. The multinational giant’s interim leadership, chaired by Fiat heir John Elkann, spent much of December on a peace mission following Tavares’s abrupt departure at the beginning of the month. “There's a strong desire among the management team to really work on that. We wanted to address [that] pretty directly,” Ostermann said. The placatory tour included a meeting between Elkann and French president Emmanuel Macron, where Macron reminded the chairman of France’s importance to the company via its roots in Peugeot and Citroën. Later in December, Stellantis management met Italian politicians to calm fractious relations between the two. Along with France, Italy has the biggest stake in Stellantis's European success, via the Fiat, Alfa Romeo and Maserati brands, but is less cost-effective than countries such as Poland, where the new Alfa Romeo Junior is made. Stellantis was forced by the Italian government to change the car’s name from Milano. The right-wing government led by Giorgia Meloni clashed with Tavares on numerous occasions as Stellantis vehicle production in the country fell to 475,090 in 2024, a low not seen since 1956. At the meeting, Stellantis outlined its commitment to keeping all its Italian plants open and increase output starting in 2026 with a range of new models, including a new promise of the production of “at least” two cars based on the new STLA small platform. The latter is a big deal in a country whose automotive output has been underpinned by the high production of affordable models. Stellantis management also extended an olive brand to its dealers in Europe and the US, who have been badly hit by Tavares’s strategy of selling fewer, higher-margin models rather than keeping the metal moving with price cuts and finance deals. Stellantis's European head, Jean-Philippe Imparato, met with his region’s dealers soon after Tavares’s ousting, while Elkann flew over to the US to placate the dealer council there. Council leader Kevin Farrish hit the headlines in September after blasting Tavares in a letter for leaving dealers in a diminished state through “reckless short-term decision-making to secure record profits”. Elkann’s overtures were well received. "It meant a great deal to us," Kevin Farrish told Reuters. "We have a ton of opportunities to fix what Mr. Tavares harmed." Stellantis also rehired retired Ram CEO Timothy Kuniskis to lead the American pick-up truck brand. Almost immediately after Tavares’s exit, Stellantis rejoined the ACEA, Europe's automotive industry lobby group, and promised to align itself with its aims to persuade the EU to water down tougher CO2 emissions limits coming into force this year. The move also brings Stellantis into step with its European dealers, who sided with ACEA rather than Tavares after he maintained that the company was ready with the EVs needed to meet the targets. The plight of suppliers was addressed by Ostermann, who promised faster payments to companies already hit by lower orders due to Stellantis’s shrinking car sales. “If we're more respectful of supplier terms, we can help the relationship with our suppliers by not stretching them so much,” he said at the December banking conference. “That could be win-win for us and for the supplier base as well." In the UK, Stellantis still has work to do to improve relations, particularly with the manufacturing industry, after announcing a plan to shut its Luton factory, which remains on course despite the exit of Tavares. Dealer satisfaction is still very low, according to the latest (summer 2024) National Franchised Dealers Association’s Dealer Attitude Survey, which is seen as a barometer of how happy dealers are with the brands they represent. Stellantis brands performed particularly badly, with Citroën ranked lowest overall manufacturer, scoring 3.4 out of 10. Stellantis’s Christmas peace mission seemingly brings to the end an extraordinary experiment during which Tavares put himself directly in the firing line in order to cut costs and boost profits in an industry that has struggled to exist as a purely capitalistic enterprise. The reward to Tavares was huge personal wealth as he nailed renumeration targets linked to financial performance. For 2022, he was paid €14.9m and for 2023 €23.5m, including a €10m ‘transformation bonus’. His base annual pay was €2m. The Stellantis board clashed with Tavares over who the company was going to be run in his remaining months, and Ostermann hinted that Tavares remained focused on the numbers most beneficial both to him and the money markets. He spoke of disagreements “with most of those related to kind of tactical issues on how to run the business over that kind of short-term time period and what actions should be taken in regard to kind of short-term metrics versus the longer-term benefit of the company.” So far, there has been very little fallout from investors at the loss of Tavares, but the fence-building is likely to also financially constrain a company that until now has exceeded the potential of the many, mainly loss-making brands with which it was built.

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Inside Stellantis’s peace mission to defuse wrath at Tavares

Firm attempts to mend relationships with unions, suppliers, dealers and politicians in start of new era

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Inside Stellantis’s peace mission to defuse wrath at Tavares

Firm attempts to mend relationships with unions, suppliers, dealers and politicians in start of new era

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