Auto CEO little known in Detroit takes over a $51 billion empire
The newly minted merger of Fiat Chrysler Automobiles NV and Groupe PSA is set to bolster the global profile of an under-the-radar executive chairman who will lead a huge and extremely complex automaker with calm intensity.
The market debut of Stellantis NV, the group of Italian-American and French automakers, is a coming-out party for its market leader Carlos Tavares. The stock rose up to 8.5% in Milan on Monday, valuing one of the world’s largest automakers at more than 42 billion euros ($ 51 billion).
Tavares has spent a 40-year career climbing the ladder of an industry that gave birth to the modern celebrity CEO. He has developed impressive turnarounds while largely going undetected commercial flights to and from Detroit.
The wiry, hyperactive 62-year-old has shown little desire to be another Lee Iacocca, Dieter Zetsche, Sergio Marchionne or Carlos Ghosn. But whether he steps into the spotlight or not, he’s going to get a lot more of it to lead an empire of around 400,000 employees and 14 brands into an uncertain future where cars are increasingly powered by batteries and software, and the internal combustion engine is likely to meet its needs Demise.
“He doesn’t sell Carlos and he doesn’t want to,” said Jim Press, an auto manager who worked with Tavares when he ran Nissan Motor Co.’s North American operations. “He develops people and organizations. The guy’s a great businessman. “
Mega-mergers in the automotive sector have failed in simpler times. Before the catastrophic combination of Daimler-Benz AG with the old Chrysler Corp. At the turn of the century, PSA arch-rival Renault SA acquired American Motors Corp. in a doomed deal that the French company rolled back a little over a decade later.
For Tavares to be successful with Stellantis, he has to do more than just optimize and reduce costs. This is the game book he used to bring PSA back from the sidelines. The self-described “performance psychopath” has to prove his product problems and catch up on electrification at a time when it seems to mean little more to investors.
After more than two years of effort to merge the companies, Tavares said Monday that management will focus on realizing the € 5 billion annual savings projected from the merger. “You can trust our management with our executability,” he said during a listing ceremony. “We’re here to do the job.”
Tavares showed his early passion as a 14 year old volunteer on the Estoril circuit near Lisbon, where he was born and raised. Since then, he has competed in more than 500 races as an amateur driver and said he became an engineer because he lacked the talent and money to race professionally. He was slated to drive a Lancia Stratos at an annual rally in Monaco this month before Covid-19 forced his cancellation.
After graduating from one of the best engineering schools in France, Tavares began his career at Renault in 1981. He headed partner Nissan’s North American operations for two years before becoming number 2 at Ghosn at Renault in 2011.
In an unusual power play for a top job, he told Bloomberg News in 2013 that since Ghosn planned to stay with General Motors Co. or Ford Motor Co., he would leave Renault within weeks and take over the helm within six months almost bankrupt PSA.
The French state and the Chinese Dongfeng Motor Group saved PSA by participating in a share sale and a € 3 billion capital increase. Tavares cut the model range, cut costs and increased vehicle prices. PSA made its first annual profit in three years.
He used similar tactics at Opel and Vauxhall, the brands GM dropped to PSA in 2017 after suffering roughly $ 20 billion in losses over two decades. By lowering development spending and buying up thousands of workers, he quickly made these operations profitable.
“The Tavares factor was probably the most underrated,” said Stephen Reitman, auto analyst at Société Générale SA. “Opel Vauxhall may have been seen as a step too far, but it proved that by patiently walking around and thinking with people, they would rethink positions that had contributed to 20 years of loss.”
These negotiating skills are quickly put to the test. Tavares will meet with Italian union leaders on Wednesday to discuss the employment impact of the Fiat Chrysler merger.
Five slide rule
Bloomberg News spoke to half a dozen people who have worked closely with Tavares. They describe it as extremely competitive with great attention to detail. He does not tolerate meetings that start late or drag on, and asks subordinates to give presentations on five slides or less.
Avares avoids the annual meeting of the business elite that Ghosn attended in Davos, Switzerland, and shows himself to dazzling car shows in worn dad shoes. In his suburb of Paris, he often tinkers with cars on weekends.
As head of Stellantis, he will answer the dynastic shareholders – the Agnellis, led by Chairman John Elkann, as well as the Peugeots – and politics will play an overwhelming role. The French state will continue to have a stake in the merged company, and Italy’s deputy economy minister has indicated that his government may also acquire a stake.
PSA outgoing chairman Louis Gallois said that since Tavares has roots in Portugal, where he owns a vineyard and a small vintage car business, he will be an effective neutral umpire.
Thanks to the Ram and Jeep divisions of Fiat Chrysler, Stellantis will be a merger of model lines with a strong presence in the lucrative truck and SUV segments of North America. PSA’s revitalized Peugeot and Citroën brands have also excelled in Europe and are the envy of Renault.
Still, the company is unlikely to gain a foothold in the luxury auto business. The Alfa Romeo and Maserati lines are struggling and PSA’s DS is tiny. Fiat Chrysler and PSA have also stumbled into the huge Chinese auto market.
“Tavares knows that if the Chinese market is a medium or long-term goal, Europe is currently Stellantis’ greatest challenge,” said Carlo Alberto Carnevale Maffe, professor at Bocconi University in Milan. “It must act by cutting costs, restoring profitability and investing in a range of technologies.”