Stellantis with Extensive Management Reshuffle: Course Correction in Turbulent Times

The European automotive giant Stellantis, known for brands such as Peugeot, Fiat, and Jeep, has announced a comprehensive reorganization of its global leadership structure to address the challenges of declining profits and drastic production downturns. The goal is to turn the tide and generate new momentum. Antonio Filosa, formerly the CEO of Jeep, will take charge of the US operations, while Doug Ostermann will replace Natalie Knight as Chief Financial Officer. New leaders are also set to assume roles for the prestigious Maserati and Alfa Romeo brands as well as the China and Europe regions. Carlos Tavares, the dynamic CEO, emphasized the importance of adaptation in the current "Darwinian phase of the automotive industry." A recent profit warning highlighted the struggle with Chinese competitors in the electric vehicle sector and the weakening sales in key markets such as the US, where inventory levels are accumulating and need urgent attention. Stellantis initially expected a positive cash flow but now faces an outflow of 5 to 10 billion euros. The forecast for the operating margin has also been lowered from 10 percent to a range between 5.5 to 7 percent. Stellantis's share prices have nearly halved since last year, showcasing the difficult situation the company is trying to combat with inventory reduction in the US by 2025. Additionally, there are tensions with European governments regarding electric vehicle subsidies, which threatens to shift production and jobs abroad. Tavares will have to answer to Italian lawmakers on Friday, as 10,000 workers at plants there have been placed on short-time work. Stellantis also threatens to relocate production in the UK if the government does not adjust its electrification policies. Stellantis, whose main shareholder is the Italian Agnelli family through their holding company Exor, was formed in 2021 from the merger of Fiat Chrysler and the French PSA. The search for a successor for Tavares, led by John Elkann, is already underway and is expected to be completed by the end of next year. Despite adverse conditions, Tavares assured the restoration of profitability and appeared undeterred by the challenge, even unafraid to permanently close brands. Analysts interpret the comprehensive management restructuring as a sign that Tavares intends to hold on until the end of his term in 2026 to regain control of the group. An insider familiar with his views stated that the CEO initially aimed to extend his term. Now, he is doing everything possible to regain control over pricing and marketing strategies, particularly in the US, and to fulfill his mission.