Stellantis: the mistake of Carlos Tavares

Dhe time of his splendor at the head of Stellantis, Carlos Tavares repeatedly repeated that the automotive sector had entered an era “Darwinian” in which only a handful of manufacturers capable of adapting to the electric vehicle revolution would remain. Natural selection has finally caught up with the boss. Sunday 1^is December, under pressure from the board of directors, he hastily resigned from the management of the Franco-Italian-American group.

Renowned for his uncompromising management and his expeditious, even brutal, methods, Carlos Tavares finally suffered the fate that he reserved in recent years for dozens of senior executives in his group deemed insufficiently efficient. Focused on profitability to the point of obsession, the boss took the group to new heights. The harder the fall will be.

After two exceptional years, the financial situation of the automobile manufacturer suddenly deteriorated. By pushing margins upwards, the prices charged by the group ended up making potential customers stall. Market shares began to decline and stocks swelled, putting the group's cash flow under strain. The mistake was to want to maintain exceptional profitability at all costs, which could not last without weakening the stability of the company. Out of ego, the boss got stuck in a headlong rush by setting untenable goals.

Carlos Tavares readily presented himself as a manager in total control of his company. Despite everything, he allowed himself to be surprised by a crisis that he poorly anticipated. However, until then, he had been able to overcome the difficulties. The recovery of PSA Peugeot Citroën from 2014, then that of Opel, bought in 2017 from General Motors, before completing a $50 billion (€47.5 billion) merger with the Italian Fiat and the American Chrysler. But Stellantis and its fourteen automobile brands have become an ocean liner that has proven increasingly difficult to maneuver. His departure especially questions his management, characterized by the excessive centralization of power without a minimum of operational counter-powers.

Feeling of omnipotence

He can also be criticized for the appointment of an inexperienced financial director, Natalie Knight, who did not know how to play her watchdog role. Finally, the sidelining of a large part of Chrysler's American management contributed to maintaining a climate of mistrust within the most profitable subsidiary.

Inhabited by a feeling of omnipotence, Carlos Tavares alienated all the company's stakeholders: dealers, suppliers, importers, unions and governments. A business cannot just be a profit center. It must also work in harmony with its ecosystem.

As long as the results were there, the board of directors let it happen. But when a boss is paid several tens of millions of euros per year, mistakes are unforgiving. The recall rope pulled at the initiative of John Elkann, the heir of the Agnelli family, president and largest shareholder of Stellantis, intervenes suddenly, without even having taken the time to find a successor. It takes the risk of opening a period of uncertainty at a time when the sector is going through a serious crisis. The difficulty is all the greater because it is not only a question of finding a new boss, but of changing a management structure that Mr. Tavares has shaped for the better but also for the worse.