CEO of a European car manufacturer Stelantis Carlos Tavares warned at the Paris Motor Show about the dangers of constant progress competition from China and pointed out that closing borders for Chinese manufacturers will not solve that problem, reports Reuters.
Tavares, who fired the company's chief financial officer and chief operating officers for North America and Europe last week due to poor business performance, said he was responsible for the bad things at the company as well as the good.
"If I didn't want that responsibility, I should be doing something else," Tavares said and reiterated that he plans to retire when his contract expires in 2026. The board confirmed last month that it was looking for his successor.
Stellantis was created by the merger of the French companies Peugeot and Citroen with Fiat Chrysler Automobiles in 2021. This year, the consortium had problems both in Europe and the USA. They have a minus of 40 percent, their stock market value fell to 35 billion euros, which is a third less than, say, Volkswagen, writes the German portal RND.
How China will bypass sanctions
Carlos Tavares also stated that keeping pace with Chinese rivals and maintaining profitability could mean closing factories or selling brands, adding that it remains to be decided which brands have a future.
He belongs to the "Darwinists" in the auto industry, he believes that such times have come that only the strongest will survive.
Closing the borders to Chinese products is a trap, as companies from China will bypass these restrictions by investing in factories in Europe, according to Tavares.
"If the Chinese take 10 percent of the market share in Europe at the end of their offensive, that means they will have 1,5 million cars." There are seven assembly plants. European producers will then have to either close them down or transfer them to the Chinese," adds the CEO of Stellantis.
He also said Stellantis' problems in the US should be resolved by the end of the year.
"Essentially, it's a problem of overstocking." "I can safely say that the problem will be solved before Christmas 2024," said Tavares.
Photo: AP Photo/Carlos OsorioStellantis building in Michigan, USA
Big problems in the USA
Analyst data and interviews with industry representatives point to serious operational mistakes by Stellantis in the US, which led to price increases beyond the purchasing power of citizens, as well as to the company's slow response to discounts, which is why tens of thousands of cars remained in stock at dealers.
"They've been trying to be firm on pricing for too long," said Cox Automotive analyst Erin Keating, whose data shows inventory problems at Stellantis.
"When the US market is your main source of income, it seems irresponsible to ignore it," she pointed out.
Dealers complain that, in addition to overpricing, Stellantis has discontinued entry-level models and underinvested in popular cars, while rivals including Ford and General Motors have been revamping their models. Ford in particular took market share away from Jeep with its Bronco SUV.
A new director is needed, trade unionists are threatening a strike
In a Sept. 10 letter to Tavares, Stellantis National Dealer Council President Kevin Farish complained that the pursuit of short-term profits had led to the "rapid degradation" of the Jeep, Dodge, Ram and Chrysler brands, adding, "You created this problem."
David Kelleher, president of David Auto Group, said that when Stellantis was formed in 2021, it was selling an average of 165 new cars a month. This year, that number dropped to 89.
"We need a CEO who understands the North American market," Kelleher said.
Tavares faces tough decisions and a potential fight with the United Auto Workers (UAW) union to resolve Stellantis' problems. The UAW threatened to strike over the delayed investments, prompting lawsuits from Stellantis who accused the union of breaching its contract.
Experts say Stellantis needs to decide long-term whether it needs four separate brands in the US.
