Auburn Hills — Stellantis NV CEO Carlos Tavares said Thursday his company was “arrogant” when it failed to quickly react to a convergence of several problems in the United States over recent months, including manufacturing issues and ballooning inventories.
“When I say we were arrogant, I’m talking about myself. Nobody else. I’m talking about the fact that I should have acted immediately,” Tavares said at an investor gathering Thursday at the automaker’s North American headquarters in Auburn Hills.
He said he should’ve formed a task force to tackle the problems, which have included manufacturing hiccups at a couple of unnamed U.S. plants that “are not operating as they should.”
The CEO made the comments as Stellantis’ U.S. sales have dipped, its dealers have struggled to move cars off lots, its plant operations have at times been rocky and dealt with layoffs, and the automaker’s market share has fallen in the United States.
But Tavares and other Stellantis executives remained bullish Thursday about their ability to course-correct in the region thanks to a combination of cost-cuts and a series of high-profile new vehicle releases, including several electric models. Despite what Tavares termed profitability “headwinds” in the United States and Europe, the automaker confirmed its overall 2024 financial guidance, including double-digit adjusted operating income of 10-11% and delivering about $8.3 billion (7.7 billion euro) in dividends and buybacks this year.
Stellantis Chief Financial Officer Natalie Knight said an influx of new models this year will make up a growing share of the company’s revenue, as much as 15-20% in the second half of the year, up from 10% in the first half. Meanwhile, she said the company plans to see price reductions in raw materials it uses in its vehicles.
And she said the company sees more employee cuts on the horizon — about $200 million worth companywide in the year’s second half.
“(There will be) questions about where we are in terms of cost-cutting, and are we on the limits or not? It is the same thing as asking, do we have limits to our imagination?” Tavares said of finding areas in the company for savings.
Beyond reducing headcount, Stellantis executives on Thursday also discussed their efforts to save money by moving more of its engineering departments to so-called “best cost” countries, such as Morocco, India and Brazil. They said they are increasingly seeking to source parts from suppliers in those lower-cost manufacturing countries. And they have slimmed down the company’s total vehicle platforms to just four, allowing it to streamline the design and manufacturing process across different brands and models, and cut costs.
The cost-cutting is all in the name of the EV transition, Tavares said, and the need to stay competitive with Chinese automakers who are seeking to grow in new markets around the world where Stellantis is seeking to maintain its market share. The automaker has set a 2030 target of selling 100% electric cars in Europe, and 50% in the United States.
He has repeatedly criticized rising tariffs, such as the move by the Biden administration to hike them to 100% for Chinese cars, and the European Union’s move this week to grow them substantially as well. The tariffs are “correcting a lack of competitiveness,” which he suggested will come back to bite some “naive” automakers over the long term.
“We go racing, we don’t expect anyone to protect us,” the CEO said, adding he believes it’s smartest to “expose yourself to the harshest possible competition on the planet.”
But Stellantis also has teamed with a top Chinese EV maker, Leapmotor, to sell its low-cost vehicles in many markets, including Europe. Stellantis owns 51% of a new Leapmotor International, which will oversee production and distribution of the cars outside China.
“We are going to leverage their own cost competitiveness,” Tavares said. “We are going to leverage their own technology mastery, namely, electric powertrains and everything that relates to connectivity. And we are going to leverage this to our benefit through the export company (Leapmotor International).”
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