chestnut hills — Stellantis NV Chief Executive Carlos Tavares said Thursday that his company was “arrogant” for not reacting quickly to a convergence of several issues in the United States in recent months, including manufacturing issues and rising inventories.
“When I say we were arrogant, I’m talking about me. Nobody else. I’m talking about the fact that we should have acted immediately,” Tavares said at an investor meeting Thursday at the automaker’s North American headquarters in Auburn Hills.
He said he should have formed a task force to address the problems, which include manufacturing problems at a pair of unnamed U.S. plants that “are not operating as they should.”
The CEO made the comments as Stellantis’ U.S. sales have fallen, its dealers have struggled to get cars off the lots, its plant operations have at times been unstable and faced layoffs, and the share The automaker’s market share has fallen in the United States.
But Tavares and other Stellantis executives remained optimistic Thursday about their ability to correct course in the region thanks to a combination of cost cuts and a series of high-profile new vehicle launches, including several electric models. Despite what Tavares called “headwinds” to profitability in the United States and Europe, the automaker confirmed its overall financial guidance for 2024, which includes double-digit adjusted operating income of 10-11% and delivery of around 8.3 billion dollars (7.7 billion euros) in dividends and buybacks. this year.
Stellantis Chief Financial Officer Natalie Knight said the influx of new models this year will account for an increasing share of the company’s revenue, up to 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 on the raw materials it uses in its vehicles.
And he said the company sees more job cuts on the horizon: about $200 million companywide in the second half of the year.
“(There will be) questions about where we are in terms of cost reduction, and are we at the limits or not? It’s the same as asking: do we have limits to our imagination?” Tavares said about finding areas in the company for savings.
Beyond reducing staff, Stellantis executives on Thursday also discussed their efforts to save money by moving more engineering departments to so-called “best-cost” countries, such as Morocco, India and Brazil. They said they are increasingly looking to source parts from suppliers in those lower-cost manufacturing countries. And they have reduced the company’s total vehicle platforms to just four, allowing it to streamline the design and manufacturing process across different makes and models, and reduce costs.
The cost reduction is being done in the name of the transition to electric vehicles, Tavares said, and the need to remain competitive with Chinese automakers looking to grow in new markets around the world where Stellantis seeks to maintain its market share. market. The automaker has set a goal of selling 100% electric cars in Europe by 2030 and 50% in the United States.
He has repeatedly criticized rising tariffs, such as the Biden administration’s decision to raise them to 100% for Chinese cars, and the European Union’s decision this week to raise them substantially as well. The tariffs are “correcting a lack of competitiveness,” which he suggested will again hurt some “naive” automakers in the long run.
“We are going to compete, we don’t expect anyone to protect us,” said the CEO, adding that he believes the smartest thing is to “expose ourselves to the toughest possible competition on the planet.”
But Stellantis has also partnered with a major Chinese electric vehicle manufacturer, Leapmotor, to sell its low-cost vehicles in many markets, including Europe. Stellantis owns 51% of the new Leapmotor International, which will oversee production and distribution of the cars outside of China.
“We are going to take advantage of their own cost competitiveness,” Tavares said. “We are going to take advantage of their own technological domain, that is, electric propulsion systems and everything related to connectivity. And we are going to leverage this to our benefit through the export company (Leapmotor International).”
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