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.
—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.”
A micro manager didn’t know how to read the room because he didn’t listen is the impression I get from this article.
Carlos was given a number of MFGs that were not in good shape. Also he is not an American so the Vehicles that get the most attention are those that he was involved in and grew up with.
Contrary to what many like to believe Chrysler was not in good shape to start with. Daimler killed most of their cars and high MPG models. Sergio took the profits from Ram and Jeep and pushed them into Fiat and Alfa and found they did not help.
While the Hemi cars were cool and sexy they were old and out dated and very heavy. They should have been updated long ago, But their time came and went. Also the smaller high MPG cars were reskinned Fiats that lacked the quality.
By the time Carlos got Chrysler he needed new platforms. He needed a more efficient and lighter Hemi V8 and he needed smaller cars that were reliable and good quality. He also and still faces the need of some kind of electric car program and this may slow down but it is not going to go away globally.
I’m in no way a Carlos fan but he was put in a tough no win situation.
While many loved Sergio he never did much to help Chryslers future. These high powered trucks and cars are great but the small CUV models are what pay the bills and make the profits.
Yes a Hellcat was expensive. But they were not high volume and most of these platforms sold cheap and at little profit. My In Laws have a 300 and they paid a price most pay for a Malibu for the car. Good deal for them but no real profit for Chrysler.
i agree with most of your commments. but i’m a little confused about ‘small cuv models paying the bills’. until sales dropped, it’s been the full sized trucks & larger suvs bringing in record sales & profit. the general rule is, the lower the msrp, the lower the profit – high demand vehicles not included. and the dodge cars always sold decently, including their last year of production, regardless of their weight and debatable lack of cutting edge technology.
so did i misunderstand your comment? no sarcasm here.
No I was referring to the car segment.
The trucks are their own thing. I don’t think they need to be pointed out at high profit. It’s the everything else.
In the case of Chrysler they have the LX platform with done high priced cars and many lower powered cars that really make nothing.
In the passenger segment the CUV is where the money is at.
Lee Iococa was put in a worse position and came out on top! Cream always rises to the top!
They need more rich Corinthian leather…and Ricardo Montalban.
Funny!
Who doesn’t!
It was also Iacocca who said in his first book that regardless of what consumers think, a car manufacturer does not set the new car designs, The market does. I believe he was referring to people’s idea that the Mustang was some kind of visionary creation when all it was was his response to what he perceived the market wanted. There are too many of these arrogant business leaders and political leaders in our world today (most of which have links to Davos) who presume to think they can tell the populace what they must have as opposed to what their interests actually are.
Citroen is now part of Stellantis . The old 2CV had a true hemispherical head. Did they somehow miss the boat by not continuing that design?
For US consumers, anyone who wanted an EV got one. There is no growth there. No new buyers want one. Like it, don’t like, it is a fact. So now, what is Jeep Dodge Ram gonna sell to anyone, gas or hybrid, at a cost that matches value? Not much. It takes 5 years to develop a car / platform. Good luck hanging on. Holding on to Maserati and Alfa will drown the company in 12 months. We just bought a used 2022 hemi Challenger. Price was nuts but it had 9000 miles on it. We have another 2022 also but why wait until they all get beat up.
The guy RUINED Jeep Dodge Ram. Have to concede that Chrysler was waiting to fold.
The Death of the Hemi is the Death of Ram pickup . Chrysler had always struggled against ford and GM killing the Hemi a Chrysler icon was plain moronic.
Well it may not help but Ford has done ok with Turbo B6 models when they don’t blow up.
Ford still gives you a choice of a V-8 if you want one and so does GM. My way or the highway rarely works.
The Hemi should have continued on since the 3.0 Hurricane six gets essentially the same fuel economy as the Hemi. This whole article is a big bowl of NOT GOOD.
Let this be a lesson in the obvious. When you don’t listen to your customers (or the people running that division), don’t expect your company (or your job) to be around for very long.
I would NEVER have even considered buying a CDRJ product, until I got the chance to drive a Charger R/T. Then I fell in love. (Okay, infatuation, but still…) Unfortunately, this was right as they were being discontinued, and now I’m back to swearing off any CDRJ/Stellantis product. I’ll say, if the Hemi was good enough to seriously tempt me to buy a Dodge, it had to be a pretty good draw.
The new Charger with its “Vroom-Vroom” speakers in the rear bumper makes my ears very sad.
mr. tavares was president of my division when he was carlos ghosn’s right arm man, at nissan. i was too far down the ladder to personally know what he was like, but was told he was difficult to work for. quite demanding, as i heard it. also, i don’t take a lot of stock in cnbc’s article – sensationalist journalism. nowhere did mr. tavares have any say. no, i don’t question the thoughts and opinions of said execs et al. and i generally agree, the north american region was not managed as well as it could have been. but these, too, are captian obvious comments from an armchair quarterback.
i wish stellantis well, as well as mr. tavares. hopefully mr. elkann, or whomever takes the ceo role, won’t suck the life & profits out of their north american counterparts as mr marchionne did.
Perhaps now is the time to wipe the slate clean. Not every Chrysler, Dodge car buyer is interested in a ground pounding, tire shreading monster. Which is mostly all that Dodge is known for nowadays. As for Chrysler, one choice only, the Pacifica, a minivan for crying out loud!
Clearly Tavares’s European elitist globalist mindset is wholly unsuitable for American car buyers. What about building good reliable everyday vehicles that folks actually want. Unchain the auto manufacturers, trash the EPA and CAFE standards too. All their mandates do nothing but put a stranglehold on creative and innovative designs. Finally, get politics the he#@ out of the car business.
With poor sales, questionable reliability, over priced vehicles and dealer “lot rot”, it’s gonna be blood bath for Stellantis.
They have killed off anything affordable chasing high end high margin models that surprisingly nobody can afford. Jeep, Dodge, Ram have nothing that’s around the $25k point which is where you want to be especially if money is tight or getting tighter. Ford is in the same boat of arrogance, Nothing in their lineup is under $40k and when those idiotic tariffs take hold the prices will go through the roof and they might as well lock the doors and go home when their now bottom end $70k Jeeps, Rams and F150s are suddenly over $100k and their premium models go from $100k to $130k. They’re literally cooked when that hits.
It’s pretty obvious that Chrysler only has one product, a minivan. That’s not “misunderstanding”. When you cut a brand to one product, you’re planning to shut down that brand. That part is deliberate. I presume that they’re not really trying to close Dodge, so I admit the partial vacuum at Dodge is confusing. Once exiting Mercedes, I don’t believe that they were ever capable of adequately replacing the 300/Charger. They could have replaced it with something a lot worse, but nobody wants to do that.
Yes it is really sad what they did to Chrysler. The LX platform cars were great. Have had multiple. People do not give Daimler enough credit for the good they did for Chrysler.
I have to disagree with your last sentence. The Daimler vermin bled the company dry! Sure they shared some technology that was used in the products developed during their reign of destruction. However the North American operations paid royalties back to Daimler for every unit of production with their design features. They killed many designs for future products that were on the Chrysler books at the time of their takeover. They would only allow new products to be launched if enough money could be saved from existing models to fund the new models. The existing models were decontented to the point they were unsellable by 2008. To summarize what Daimler did for Chrysler: they raided the 10 billion dollars from the bank account, funded their own product development and expansion into Asia and left a broken North American division 10 years behind in product develop ent and ripe for bankruptcy. Much of this was seen after the fact but I got to live it so it is a pretty accurate assessment of what Daimler did for Chrysler.
I just don’t understand the “thinking” to name a sedan after what was an iconic vehicle “Charger”!
They hit the mark with “Challenger”!
Why defame a name?
They cost cut the reliability out of their engines. Stupid things like plastic oil filter housings that will invariably break (3.6), 2.4 engines that drink oil only to have the dealer tell you, it’s “normal”, and cvt transmissions that are simply trash. I understand a mistake now and then, but these problems have been going on for a decade and no change in design? Seems that the moron ceo had no idea of what he was doing and crushing the business in the process. As much as I hate to, the next cars will be Hondas and Toyotas for us.
When in doubt, bring back the K car. Put money in the bank and invest in your future
I’ve worked at a couple of companies where bad management destroyed them. Even though I was far down the ladder, it was obvious to me that the money being spent was going to the wrong things, and that it wasn’t going to end up good.
It’s always a shame to see that sort of thing happen.
Your comment suggests that possibly you have worked in companies with good management. I envy you. I have no recollection of any upper management I have worked for having any understanding of the customers they wanted to collect income from. I for one find it hard to believe there are any Lee Iacoccas in industry anymore.