(BFM Bourse) – Stellantis shares plunged this Monday on the Paris Stock Exchange while its general director gave up his apron during the night from Sunday to Monday. Which surprises the market and leads the group into the fog.
Carlos Tavares lost in a few months much of the reputation he had built over 10 years. Which ultimately forced him to leave the ship earlier than planned. The CEO of Stellantis submitted his resignation to the company's board of directors on Sunday.
On the Paris Stock Exchange, the announcement heated investors. Stellantis shares lost 8.3% around 10:20 a.m., showing the biggest decline in the CAC 40. Over the whole of 2024, the car manufacturer's shares fell by 44.1%.
The fall of the manufacturer born from the merger between Peugeot SA and Fiat Chrysler, in January 2021, was extremely brutal. Remember that last year Stellantis had the best performance in the CAC 40 (+59.23%).
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Stocks too high
But everything changed in 2024, the year in which Stellantis' North American problems, long ignored by the company, finally broke out and weighed down its results.
The company allowed its inventories to accumulate in the United States, its most important market in terms of profitability, to the point of reaching worrying levels which weighed on both its sales and its margins. In the first half of 2024, its current operating margin in North America fell from 17.5% to 11.4%.
These persistent difficulties then led the group to issue a heavy warning on results at the end of September, damaging management's credibility in the process.
At the beginning of October, a first shock occurred with several managerial changes, including in particular the departure of the financial director, Natalie Knight, who remained in this position for less than a year and a half.
Carlos Tavares had saved his place. But the company had announced that he would not return at the end of his current mandate, which expires on January 1, 2026. The Portuguese leader had to resolve to let go of the steering wheel more than a year in advance, by making therefore his apron on Sunday, with immediate effect.
Stellantis must find a successor by the end of the first half of 2025. Until then, John Elkann, heir to the Agnelli family (the founders of Fiat) and chairman of the board of directors of the car manufacturer, will chair “a temporary executive committee”.
An isolated leader
The reasons for Carlos Tavares' sudden departure have not been frankly explained by the company. “The success of Stellantis since its creation has been based on perfect alignment between the key shareholders, the board of directors and the CEO (general manager, editor's note). However, in recent weeks, different points of view have emerged, which brought the board of directors and the CEO to today's decision,” explained Henri de Castries, a director of Stellantis.
“Tavares was certainly looking to make significant cost reductions, while Stellantis' problems are more due to an overly optimistic view of its brands, its pricing power and its market position, and a “failure to take into account the growing anxiety of its dealers, who felt that their perspective on the real situation on the front lines was being ignored,” comments Bernstein.
The resignation of the manager “seems to confirm that Carlos Tavares was increasingly isolated (within management but also, therefore, within the board) and, perhaps, too rigid to adapt a strategy which has certainly delivered excellent results for many years (recovery of PSA and Opel, debut of Stellantis), but no longer seemed adapted to the current environment as evidenced by the group's significant commercial and operational difficulties this year (loss of market share, stocks too high, difficult launches, distribution, etc.)”, develops Oddo BHF for its part.
The Ferrari houses
In any case, the departure of Carlos Tavares does not reassure the market about a potential recovery of Stellantis. This even though the company confirmed its objectives for 2024 on Sunday.
Since the profit warning at the end of September “investors are increasingly worried and are asking questions about Stellantis”, underlines Bernstein. “We fear that the departure (of Tavares) in the short term portends a more difficult outcome for many of them – at least in the months to come,” adds the broker.
“With this departure, a page is turned and visibility should remain low as long as a new commander is not at the helm of the ship”, judges Invest Securities for its part.
On a more positive note, Royal Bank of Canada recalls the case of Ferrari, another company in the fold of the Agnellis (who hold 24.65% of the capital) and of which John Elkann chairs the board of directors.
John Elkann had temporarily replaced the general manager, Luis Camileri, after his departure in December 2020 for personal reasons. John Elkann thus took over in the interim until June 2021, when Benedetteo Vigna took charge of the prancing horse. “Since then, Ferrari shares have increased by 140%,” says Royal Bank of Canada.
We will therefore see if John Elkann will be able to reproduce this success at Stellantis. “Elkann has already shown good instincts when it comes to choosing a new general manager,” Bernstein said.
“We expect the board to consider a mix of internal and external candidates, but the interim period will be difficult for company management and investors,” warns the consultancy.
“The fact that a large number of talented ex-FCA managers from the Marchionne era in North America have left Stellantis complicates things,” he adds.
“The departure of Carlos Tavares could also mark the beginning of an evolution in governance that we now consider to be perfectible and not unrelated to the operational difficulties encountered,” judges Oddo BHF.
“Indeed, in the current configuration, the CEO supervises, alone, an executive committee that is still far too large (29 members today), a cumulative legacy of historical PSA/FCA approaches, which can, in our opinion, have the consequence of diluting responsibilities and delay decision-making (we remain, at this stage, awaiting details concerning the composition of the temporary executive committee mentioned yesterday but it is likely that it leans even more towards the FCA)”, underlines the broker .
Julien Marion – ©2024 BFM Bourse
