Stellantis cost-cutting could hit the top ranks next
Stellantis (STLA) CEO Carlos Tavares is reportedly looking to extend his company’s cost-cutting plans to hit top-level management, from regional heads to brand executives, as its rough year continues.
Bloomberg, citing unnamed sources familiar with the situation, reports that Tavares may discuss his proposal at a meeting with Stellantis’ board of directors in the U.S. this week. His potential cuts could hit a series of departments across the automaker’s operations.
Stellantis late last month said it was in “full execution mode” as it began cutting seasonal supplemental employees and planning indefinite layoffs of union-represented workers “across its footprint.” The automaker in August laid off 1,200 workers in Warren, Michigan, and has been offering salaried workers buyouts since July. An executive recently described implementing a “doghouse” cost-cutting initiative.
The board is also expected to talk about its CEO’s future, a few weeks after it was first reported that Chairman John Elkann had started searching for Tavares’ successor. The 66-year-old executive’s contract is up at the end of 2026, although Stellantis is open to extending his tenure beyond that date.
Both Ellkan — who also serves as CEO of Exor NV (EXXRF), Stellantis’ biggest shareholder — and Tavares are focused on shoring up Stellantis’ operations in the U.S., which is a major profit center. Sales in the market fell by 20% last quarter, with some brands reporting year-over-year declines of more than 40%.
Stellantis’ performance in North America has been rough in recent months, plagued by big recalls, plummeting profits, quality issues, and executive departures. Last month, the automaker slashed its full-year guidance for adjusted operating income and expected industrial free cash flow, and it pushed up its timeline to lower U.S. dealer inventory to about 330,000 units.
In recent weeks, Tavares’ leadership has been criticized by the United Auto Workers (UAW) union — which represents 43,000 Stellantis workers — and the U.S. Stellantis National Dealer Council, which warned “disaster has arrived” at Stellantis. An heir to the Chrysler family declared his intent to buy the brand back from Stellantis and lambasted Tavares and other executives.
The UAW filed a series of federal labor charges against the automaker last month and alleged Stellantis has failed to keep the promises it made in its 2023 contract. At least two UAW locals have authorized a strike, and union president Shawn Fain will rally against Stellantis Thursday afternoon in Washington, D.C.
In turn, the automaker filed nine lawsuits against the UAW and 23 locals and denied the union’s claims. On Tuesday, Stellantis said it was contesting a Denver-based local’s authorization vote and file another two lawsuits against the UAW.
After Tavares meets with Stellantis’ board, he’s expected to address Italy’s parliament about his company’s production in the country. Stellantis on Thursday said it ended the third quarter controlling 17.6% of the European markets year-to-date, noting it was ranked in first in Italy with more than 31% of the market there. More details will be made public later this month.
“We are navigating one of the most challenging periods the industry has faced, but Stellantis remains focused and committed to delivering value to our customers,” Uwe Hochgeschurtz, Stellantis’ chief operating officer overseeing Europe, said in a statement.