Unlock the Editor’s Digest free of charge
Roula Khalaf, Editor of the FT, selects her favourite stories on this weekly newsletter.
The considered a vehicle driven by executive committee doesn’t encourage confidence. Investors in Stellantis marked its shares down sharply on news that chief executive Carlos Tavares had resigned. Until a successor is appointed, a newly formed committee will take the wheel, led by chair John Elkann.
Given the depths of the pit that Stellantis finds itself in — with the stock down greater than 40 per cent to date this 12 months — the share price response reflects the incontrovertible fact that the chief’s departure doesn’t take the carmaker much closer to recovery.
Stellantis is grappling with a failed bet. The group’s burst of profitability — with operating margins in 2023 60 per cent higher than those of rival Volkswagen — turned out to be the results of unsustainable price rises throughout the post-Covid supply shortages. When availability returned to the market, consumers deserted its models in droves. The resulting inventory build-up is barely step by step being reversed.
It might be difficult for the architect of a tailspin to be the one to right course. Tavares, as an illustration, engaged in an in depth management shuffle in October, which involved the departure of group chief financial officer Natalie Knight. While “deputy heads must roll” will not be an unusual response when an organization runs into trouble, it felt difficult to square with the corporate’s — essentially strategic — misfire.
Tavares, by all accounts a powerful personality, also managed to cross swords with lots of Stellantis’s key stakeholders. US dealers sounded the alarm in October, writing an open letter expressing their concerns over the group’s strategy. Italy’s deputy prime minister Matteo Salvini demanded an apology after a testy parliamentary session. Trade unions in Italy and France have expressed concerns concerning the group’s cost cuts.
While Tavares was increasingly unlikely to serve out his full term, which might have expired in the beginning of 2026, this abrupt swerve leaves Stellantis driverless at a critical time.
Clearing excess US inventory is step one of any recovery plan. However the build-up is a symptom, relatively than the cause, of the group’s troubles. The basis is the autumn in its US market share, which has declined from 14 per cent in 2019 to about 8 per cent today, on Citi data. Stellantis, which is launching a slate of recent models must grapple with more fundamental questions — including its pricing, margins and production footprint — sooner relatively than later.
On top of its self-inflicted woes, there are the ills wreaking havoc on the European automobile industry. True, Stellantis has negligible sales within the highly competitive Chinese market. But sluggish growth in its core markets and an uncertain transition to electric vehicles already present a considerable risk that Stellantis’s restart stalls before it really gets began.
camilla.palladino@ft.com
