- Operating income at Stellantis plummeted 40% in the first half of the year.
- Tavares is addressing issues at the company’s North American operations during his summer break.
- Stellantis recently announced it will cut over 2,400 jobs at the Warren Truck assembly plant.
Carlos Tavares, the CEO of Stellantis, has reportedly kicked off a high-stakes stint in Detroit, aiming to overhaul the automaker’s floundering North American operations. According to inside sources who spoke to Reuters, the group’s boss is on a mission to craft a turnaround strategy while also working to restore confidence among employees and investors.
In the first half of the year, Stellantis reported a 40% drop in adjusted operating income, falling to €8.46 billion ($9.28 billion). The company’s shares have also plummeted nearly 50% in the past five months. Tavares has characterized the brand’s H1 results as “humbling” and highlighted significant issues in North America, including excessive vehicle inventories and manufacturing challenges.
Read: Stellantis Profits Crash In 2024, Some Brands Could Be Axed, CEO Warns
Tavares typically visits the North American operations every four to six weeks but is making this current trip during his summer break. According to an unnamed source who spoke to Reuters, the CEO wants to make it clear that he is “handling it personally,” noting that the “North American operations are basically funding the rest of the group.”
Throughout his trip, Tavares will meet with top-line managers, and dealers, and visit a factory in Detroit. He is expected to formulate a strategy by the end of the week and may look to reduce inventories and adjust vehicle production.
Jefferies analyst Philippe Houchois believes Stellantis’ North American business was badly affected by its decision to increase prices despite consumers not being ready to pay for them. “They have lacked pragmatism to address straight away the inventories building, they should have made more tactical prices to avoid that,” Houchois said.
Tavares blamed himself for not acting quickly enough to address issues with the brand’s North American operations while speaking at its investor day in Michigan earlier in the year. “We were arrogant,” he said. “I’m talking about myself, nobody else.”
Stellantis has already moved to cut 2,450 jobs from its Warren Truck assembly plant near Detroit and will also offer a round of voluntary buyouts to U.S. salaried employees. Tavares has also said two of the company’s local plants have inefficiencies that must be addressed.
