What is the legacy of Carlos Tavares?

Highs and lows of the Tavares management of the Stellantis group, grappling with a difficult transition phase and 14 car brands to look after

Photo by: Stellantis

By: Juan Felipe Munoz

Dec 13, 2024 at 4:30am ET

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Stellantis is looking for a new boss. Carlos Tavares, who has led the group since its creation in 2021, has left the organisation after months of tension with the board, unions, dealers and the Italian government. The news was somewhat anticipated in October, when the company announced that Tavares would step down at the end of his contract in 2026. Such announcements are not usual.

The Portuguese manager is leaving at a time when things are not going well for the 14-brand automotive group. Although it is not the only automotive conglomerate facing different challenges in the industry, it is in a somewhat more difficult situation than many of its rivals. The transition from combustion engine cars to fully electric cars and the rise of China are two issues that the entire industry has to face. In the case of Stellantis, the lack of fresh products further complicates the situation.

He made it possible

Carlos Tavares' first achievement was his involvement in the negotiations between PSA and FCA. He later became the CEO of the merger that made it possible for 14 different brands to coexist. Stellantis started its first year as the third largest car manufacturer in the world, behind only Toyota and Volkswagen.

Synergies started immediately. The European brands of the new group started collaborating with each other to save costs and time in the development process. Long-standing rivals such as Peugeot, Citroën, Opel and Fiat started working on common projects and platforms. This is how the latest generation of the Lancia Ypsilon was born, based on the Peugeot 208/Opel-Vauxhall Corsa; or the upcoming Fiat Grande Panda, based on the latest Citroën C3; Fiat's upcoming large B-SUV is expected to be based on the second generation Citroën C3 Aircross/Opel-Vauxhall Frontera.

Fewer cars sold

	Revenues (euros)	Deliveries (units)	Revenues per car delivered (euros)
2019 (FCA+PSA)	182,838,000,000	8,080,476	22,627
2020 (FCA+PSA)	133,882,000,000	6,338,166	21,123
2021	152,119,000,000	6,583,269	23,107
2022	179,592,000,000	5,842,000	30,742
2023	189,544,000,000	6,175,000	30,695
January-September 2023	143,504,000,000	4,805,000	29,866
January-September 2024	117,977,000,000	4,105,000	28,740

Stellantis global sales and revenues (Source: FCA, PSA, Stellantis)

It is truly remarkable to reach this level of collaboration in less than four years. The result is even more remarkable: the company's operating margin more than doubled between 2020 and 2023. The combined operating profit of PSA and FCA in 2020 amounts to EUR 7.75 billion on a total turnover of EUR 182.84 billion. This is an operating margin of 5.3%. Last year, Stellantis' margin was 11.8%. Interestingly, while the company made more money than ever before, it sold fewer cars.

The end of the party

Shutdowns during the pandemic and the subsequent semiconductor shortage forced all Western car manufacturers to raise the price of cars and make customers wait longer for them. Then inflation hit the markets and prices rose further. Even though the closures and shortages ended, car prices were still too high. At the end of the day, car manufacturers did not care about the volume of sales, as long as their profits continued to grow.

The party is over

Stellantis operating margin

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However, the rise of Chinese manufacturers changed everything. As they began to expand globally with their very competitive cars, the solid position of traditional car manufacturers began to erode. They were no longer safe with the high price/low volume formula. This explains much of the problem the Western industry is facing at the moment.

There is a need for new product

Average age of the current range in Europe, excluding vans and quadricycles (calculated as time elapsed between now and official model presentation)

Photo by: Motor1.com

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Although the new reality is affecting everyone, Stellantis found itself in a more vulnerable situation. Eight of its 14 brands are in dire need of new products. The Fiat passenger car range in Europe (excluding vans), for example, has only six models available with an average age of 6.4 years. In contrast, the Volkswagen brand offers 18 models in Europe, with an average age of 4.2 years. Lancia is still a one-model brand; DS offers four models, the last of which was presented in February 2021. Alfa Romeo offers four models, two of which are over eight years old. Maserati has abandoned the Ghibli, Quattroporte and Levante, leaving the brand with the Grecale, Granturismo/Grancabrio and MC20. And Abarth depends on two models. In North America, Chrysler has only one model in its range, and Dodge awaits the upcoming Charger, which will join the Hornet and the old Durango (introduced in 2010).

Also in the US

Average age of the current range in the US, excluding van

Photo by: Motor1.com

The strict cost-cutting strategy has allowed Stellantis to earn a lot of money. However, this came at the expense of ageing lines and rising prices, which affected the group's market share in North America and Europe. Tavares made this possible. Now it is time to turn the page.