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CNBC: Stellantis CEO Carlos Tavares Didn’t Get the U.S. Market, and the Hemi Was a Victim
We’ve told you about Carlos Tavares’ abrupt departure as CEO of Stellantis, the world’s fourth-largest automaker, and we’ve outlined what his successor must do to reverse the company’s downward trends.
And now CNBC has done a deeper dive on Tavares’ tenure as CEO. Multiple anonymous sources in the story mentioned Tavares’ “arrogance,” including overruling his U.S. executives about keeping the popular Hemi V-8 engine. “’Everybody wanted to keep [Hemi],’ said one source. But it was, ‘You need to be greener’ and there was little to nothing they could do to change the decision.”
Some additional takeaways from the story:
—Tavares was a student of a previous boss, Carlos Ghosn, the former head of Nissan, who believed you could cost-cut your way to success. “Several former or current leaders, as well as other U.S. employees with the trans-Atlantic automaker, said Tavares’ relentless focus on cost-cutting, his goal of achieving double-digit profit margins under his ‘Dare Forward 2030’ business plan, and a reluctance, if not unwillingness, to listen to U.S. executives about the American market led to the company’s current situation and, ultimately, Tavares’ departure last week.”
—Tavares believed the (immediate) future was electric, and it’s no secret that sales of all-electric vehicles are suffering in the U.S. “Several sources said executives tried multiple times to deprioritize the company’s emphasis on electric vehicles or, at the very least, launch gas-powered models before EV models to maintain sales, but Tavares was dismissive of such actions,” the CNBC story said.
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—The company’s U.S. dealers, especially those selling the Dodge and Chrysler brand, have been starved for new products, in part due to Tavares’ lack of understanding of this market. “Those issues came even as executives said they were dealing with previously reported problems with delays in new products, cutting low-margin vehicles such as the gas-powered Jeep Cherokee and Dodge Charger and Challenger without any replacements ready, and waging battles over costs with suppliers, dealers, and the United Auto Workers union, among other ‘arrogant’ mistakes in the U.S.”
—Tavares’ habit of micromanaging and overruling his executives in the U.S. resulted in a massive loss of talent, the story said. “Such issues led to an exodus of executives, such as Tim Kuniskis, a prior Swiss Army knife for the automaker, who this week returned to the company; global Jeep head Christian Meunier; longtime Jeep North America executive Jim Morrison; and newer leaders, such as Mamatha Chamarthi, who headed the automaker’s software business development, and Chief Financial Officer Natalie Knight. Stellantis North America head Mark Stewart left the company in January to become CEO of Goodyear Tire and Rubber Company.”
So now a search is underway to find a replacement for Tavares, which is expected to happen by mid-2025. The permanent CEO could well be the man who is presently the acting CEO, if he wants the job: 48-year-old John Elkann, described by Fortune magazine as an “enigmatic billionaire,” is the great-grandson of Giovanni Agnelli, who founded Fiat. Elkann, who reportedly inherited $2 billion after the death of his grandfather, is the chairman of Ferrari.
Elkann recently toured some of Stellantis’ U.S. sites and presided over a leadership conference at the company’s headquarters just outside Detroit. Again, quoting CNBC and one of its unnamed informants: “The source, who attended the U.S. town hall, said Elkann made no indication of revisiting any decisions. However, they confirmed the company has ended a surgical cost-cutting program internally named ‘Darwin’—a nod to Tavares saying the auto industry was in a Darwinian period, in which only the strongest survive. ‘Darwin is dead because we intend to survive,’ Elkann said, according to the source.”
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I worked for an Italian leather upholstery manufacturer who had no clue of the American market. In Europe most sales were three piece suites, sofa and two matching chairs. They set up the US warehouse program the same way with retailers having to buy three piece suites or order from Italy with a 16 week delivery. It was a disaster. In a sales meeting I spoke up (it was a minor source of income for me as I represented several other companies and didn’t care if I got fired) and suddenly other reps joined in. The program changed because the Italians listened. This auto guy didn’t.
Not understanding the automotive-driven mind is costing car makers big money. From my own research the majority of people here in the US like to drive vehicles they are familiar with…ICE. Of course, cars are what makes dreams come true but I for one like a vehicle that has a soul, and driving a car with that sweet sound of ICE is where we drive our lives. Most car makers design and build cars based on people without knowledge of the real automotive world. It’s car owners who will tell you what they want or not. EVs, so far, are not the vehicle of choice for the majority. I was conceived in 1956 and born in 1957 into the car industry and involved as an automotive entrepreneur/writer/consultant for over 50 years. My family has been building custom vehicles since the late 1800s. I’ve learned to ask, or at least have a good sense of connection to their automotive desires, then sell them that.
All this Hemi talk is amusing.
I remember another time when Chrysler took on selling Alfas, both the Spyder and V6 164.. The salesmen were standing around without a clue.
I was in the Italian motor biz, and was asked by a friend what they could do to stimulate Alfa foot traffic, as the Chrysler sales were moribund waiting for the LH series..
I suggested they go out and have a bunch of banners made with the Alfa logo on one side and the text across reads, “It’s a Hemi!”
He asked, “The Alfas are Hemi’s?”
“Yep, since 1924.”
I recently purchased my first Mopar, 2023 Dodge Charger. V8 Daytona option.
Fantastic machine!! No equivalent at Ford or Chevrolet; I.e. four door sedan.
For heaven’s sake keep the V8 option. This is the USA!!
The Hemi should have remained. Just as other (Ford’s Coyote, or GM’s LS series for examples) V-8’s have continued to evolve, just imagine how the Hemi could have continued to evolve and improve; smaller, lighter, improved gas mileage and performance. I guess we will now never know….
I have been a brand-loyal Mopar guy for years, decades. But that is due in part to Mopar offering what I preferred, an overhead valve V-8 power plant. I imagine if and when it comes time I will have to consider a Ford or GM product for a V-8 powered option.
In the meantime I will take the utmost of care with my Hemi V-8 powered Challenger, Jeep Grand Cherokee and Dodge RAM pick-up and hope they last me my lifetime. I cannot ever see myself purchasing and driving some twin-turbo 4-banger or inline 6 or going electric.
With the new Charger body style, I think they can salvage the situation. Price and performance are critical factors. Bring out a rear wheel drive model which will bring the cars in at a affordable price point and probably increase reliability. Also bring back the Pentastar and Hemi engines which are reliable, proven engines. I personally am not interested in a twin-turbo, all-wheel drive car because of reliability and cost of repair.
Its no wonder RAM truck sales are down, when the manufacturer refuses to listen to the boots on the ground and understand that 1/2 ton trucks in the United States sell with V8 engines in them. The hurricane engine is massively complicated and it’s long term reliability is not known. The hemi V8 was developed in 1954, and is a rock solid design which truck buyers look for in a vehicle that will work and not leave them on the side of the road.
GM and Ford will benefit from the HEMI departure and the reason is Stellantis Executive Team Management that is incompetent. All we can hope for is that Stellantis pulls it’s head out of its ass before RAM goes the way of DeSoto.
And the craziest thing about the product starvation is they have a plethora of platforms to choose from across the Stellantis group! I can’t for the life of me figure out how they could discontinue the likes of Journey, Cherokee, and Renegade without replacing any of them, in a market that is crazy for SUV/CUVs. How difficult would it have been to leverage an existing platform? Then’s there’s the ridiculous decision to discontinue the 100,000 unit LX platform and also replace it with – so far – nothing!
Tavares said at the beginning he’d give all the brands a chance, but without approving any new products, how does a brand stand a chance? The most absurd mismanagement of an auto company I’ve ever seen. Maybe they’ll find a successor who understands the North American market and they can make a comeback.
Tavares wasn’t wrong about EVs; he just went about it the wrong way…as did GM and Ford. The issue with EVs is that it’s not consumers driving the segment any longer; it’s the Federal and State Governments. Trump may (eventually) roll-back some of the aggressive CAFE goals and EV tax credits but states like California, New York, and others are likely to keep their EV mandates in place…at least for the immediate future.