It’s no secret the automotive industry has hit a couple of potholes in 2024. Flattened consumer spending, persistently high rates of interest and provide chain disruptions stemming from geopolitical tensions have forced auto manufacturers (each budget and luxury) to negatively adjust their forecasts, writes Adrian Stalham of Sullivan & Stanley
Aston Martin’s production volume for 2024 has fallen to six,000, representing a 14% decline from its initial guidance. Meanwhile, plummeting sales in China have caused VW’s profits to fall by 60%.
Although there are vibrant spots – reminiscent of global electric vehicle (EV) sales being up 22% in H1 2024, spurred by increased efforts to combat climate change – it’s hard to look beyond the shadows.
Stellantis is the most recent company to lose its way. Born through the merger of Fiat Chrysler Automobiles (FCA) and PSA Group (Peugeot, Citroën, DS, and Opel), Stellantis is a shining example of how an ambitious project to mix diverse brands, products and markets can quickly veer off target.
Whether it’s Stellantis’ share price falling by 45% this yr, or its Q3 YoY revenue down 27%, it’s clear that there’s a number of work to be done. But a change in leadership might be the jump start it must reassert itself in an increasingly competitive market.
What began the tailspin?
Much of Stellantis’ historic success will be attributed to its strong roster of truck brands, with Jeep, Dodge, Chrysler and Ram the standout names. Unfortunately, its position on this space has faltered in recent times.
A part of this will be attributed to recurring reliability and quality issues. Not only have 200,000 vehicles been recalled as a result of faulty electronic stability systems.
Carlos Tavares, CEO of Stellantis, has admitted that many newly built Ram trucks require repairs before reaching dealerships – making it hard to instil confidence in consumers and shareholders alike.
The proven fact that Stellantis’ most important competitors are making inroads within the truck market hardly helps matters. Each Ford and General Motors have updated their model lineups, while there are an increasing variety of Chinese rivals to contend with.
Nevertheless, for my part, it’s the sense that Tavares has lost the dressing room which is most worrying. It seems like Stellantis’ CEO is battling on all fronts while winning on none, which makes his decision to step down from the role in 2026 unsurprising.
Disputes with the United Auto Staff (UAW) union surrounding Stellantis’ delayed investment and alleged contract breaches is threatening to bubble over into strike motion.
There’s sustained criticism from Italian government officials about a scarcity of investment (again). And flawed pricing strategies have left US dealerships with excess inventory without the hope of shifting the stock.
These aren’t isolated incidents. These are a pattern of mismanagement that, if left unchallenged, threaten Stellantis’ future.
Someone latest in the motive force’s seat
From my perspective, Tavares rode the rebound wave of growth from the pandemic but didn’t appear to have the toolset to navigate tricky market conditions. That being said, he’s still in a position to impart some words of wisdom.
Case-in-point, he recently threatened to chop underperforming brands adrift. Although rationalising the brand portfolio could also be an emotional journey, he’s right – Stellantis isn’t able to proceed supporting brands that aren’t financially performing.
This plan of action would enable the business to make clear which points of its offering will represent Stellantis across the broader automotive market.
From a personnel standpoint, Tavares’ departure would pave the best way for a rare breed of leader – the “wartime CEO”, able to take the reins when the going gets tough.
This unique individual can anticipate future market dynamics, make daring strategic calls that catch the competition unawares – and most significantly, unify a fractured leadership team.
The latter point can’t be understated. Firms’ ability to navigate winding roads hinges on ‘telepathic’ alignment and integrity at board level – something Stellantis is severely lacking.
The unexpected departures of director Andrea Agnelli in January 2023 and non-executive director Kevin Scott in February 2024 were removed from ideal, contributing to wider disarray.
The “wartime CEO” must also bring an unwavering attention to detail, upholding the best standards of quality.
Anyone taking a look at methods to make a prestige u-turn need only look to Land Rover for guidance. The British brand, previously renowned for its unreliability, has turn into the top of engineering.
What’s more, the tools needed to make these changes are well-documented, and more cost effective in comparison with the prices – each financially and status – of recalls.
Don’t just stay the course
It’s hard to search out cause to root for Stellantis in the mean time. From an outsider’s viewpoint, the situation looks just a little chaotic. And while the mix of growing environmental pressures – and subsequent shift to EV – and the approaching macro-economic upheaval from technological advancements are cause for concern, these pale in significance to the corporate’s self-inflicted problems.
Stellantis, and by extension Tavares, are guilty of constructing the identical mistakes again and again. Failure to resolve it will see potential investors stay away, in addition to brain drain setting in amongst employees.
Appointing a brand new CEO that has the arrogance to implement a brand new strategic direction – even when this implies leaving certain brands within the dust) might be the catalyst needed to deliver long-term stability.
Adrian Stalham is chief change officer, Sullivan & Stanley
This Article First Appeared At www.am-online.com
