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challenges together
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FCA and PSA have said Stellan s can cut annual costs by over 5 billion euros ($6.1 billion) without plant closures, and investors will be keen for more details on how it will do this.
Marco San no, a partner at consultants Oliver Wyman, said he expected Tavares to disclose the outlines of his ac on plan soon, but without divulging too many details at fi rst.
“He has proven to be the kind of person who prefers ac on to words, so I don’t think he will make loud statements or try to over-sell targets,” he said.
Like all global automakers, Stellan s needs to invest billions in the years ahead to transform its vehicle range for the electric era.
But other pressing tasks loom, including reviving the group’s lagging fortunes in China, ra onalizing its huge global empire and addressing massive overcapacity.
“It will be a step-by-step process, also to allow the market be er appreciate every single move. I don’t think we will have all the details before one year,” San no said.
FCA CEO Mike Manley, who will head Stellan s’ key North American opera ons, has said 40 percent of the carmaker’s expected synergies would come from convergence of pla orms and powertrains and from op mizing R&D investments, 35 percent from savings on purchases, and another 7 percent from savings on sales opera ons and general expenses.
Source: Autonews.com
Tavares: FCA, PSA are better off meeting challenges together
The world’s newest automaker, Stellan s, is building a strategic plan from the ground up as it looks to go on the off ensive and show that innova on isn’t limited to startups, its CEO says.
Carlos Tavares, in an exclusive interview with Automo ve News, said he worked for “many months” to assemble the company’s leadership team announced Tuesday. The merger between Fiat Chrysler Automobiles and PSA Group closed Saturday, and the combined en ty now must mesh its disparate cultures and the opera ons of 14 brands on either side of the Atlan c Ocean in the midst of the ongoing pandemic.
“There is an ongoing COVID crisis, but the two companies are not in crisis,” Tavares said. They “have a robust fi nancial posi on, they have been opera ng properly and they are crea ng value, so there is no crisis on this merger. It’s all about two teams that understand a er they turn around their own companies, at one point in me, that we are be er off to be facing the future challenges together than in the standard opposi on, which demonstrates a high level of maturity.”
Tavares, who had been PSA’s CEO since 2014, said the two companies understood “they could con nue to be on a standalone basis, but they remember what happened when they had to turn around their [businesses] in the last few years, and they understand how diffi cult it was and they see the challenges coming.” Continued on Page 5
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Stellantis CEO Carlos Tavares, left, with Chairman John Elkann.
The Stellan s execu ve team, Tavares said, will be a balanced group “between the two families.” The merger was not a defensive play, he insisted.
“This is not only about protec ng ourselves against the challenges that we already see, this is also about being off ensive in making things which are innova ve, which are diff erent from what you are used to seeing from carmakers and that hopefully will posi vely surprise you,” Tavares said. “And giving you the sense that we can also be very breakthrough-driven, but very innova ve and you don’t have to wait only for the startups.”
The companies were on solid foo ng coming in, Tavares said, which gives Stellan s me to do the “deep management work” to set up a long-term strategic plan.
Tavares aims to establish a cohesive, “bo om-up” dynamic that takes into account the input from the younger genera on of workers on the company’s “strategic task teams,” he said. He wants this group to be “deeply involved in the diff erent task teams that are going to work on the diff erent breakthroughs that we are going to submit to them.”
“That means bringing all of those younger people in those teams as crew members of those teams, and giving them the me and the ability to work on those breakthroughs and then come back to us with some proposals,” Tavares said. “Then we will adapt to the top-down direc ons and try to fi gure out what is the best fi nal conclusion. That needs me, and we’ll give them me. As we are not in a crisis mode, we are lucky to have the me to do so.”
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Continued from Page 5 With the merger completed, Tavares says he plans to visit the company’s major opera onal centers in Italy and the U.S. in the next few weeks. He’ll fi rst meet with the internal teams and give them a chance to ask him ques ons. A er those ini al mee ngs, he’ll turn his a en on to ge ng acquainted with his U.S. dealers on another trip. Tavares will consult with former FCA CEO Mike Manley, who now heads Stellan s’ Americas opera ons, on the best way to interact with the dealer body.
Jeep globaliza on
Jeep is the “most global brand” of Stellan s, Tavares said, because of its presence in Europe and China as well as North America. Its global push will con nue under Stellan s, he said.
The SUV brand is pushing into new markets and higher-priced segments, adding new capability to storied nameplates and stepping into the world of electrifi ca on. The premium Wagoneer and Grand Wagoneer u lity vehicles are on the way later this year, while a redesigned Grand Cherokee soon will off er a third row for the fi rst me.
“The direc on is already set. Jeep is not a brand that has any problem of vision or direc on,” Tavares said. “It is a brand that needs just to be supported to keep on moving profi tably as it has been so far. I think there is a sentence in the U.S. that is something like, ‘If it’s not broken, don’t try to fi x it.’ I think that applies very well to Jeep.”
Cost savings
The company’s projected cost savings have risen from $4.5 billion when the merger was proposed in 2019 to about $6 billion. That’s because “the people from the cross-company teams have so many bo om-up ideas,” Tavares said. “I did not ask for a be er number. I just said, ‘Guys, let’s get the job done and let’s execute before we start jumping on the numbers,’ “ Tavares recalled. “But they came back to me and say, ‘Well, we have a problem. The people are working so well together that they are coming with tons of ideas, and we cannot just tell them no because the ideas are very good.’ “
Around 80 percent of the total synergy amount, he said, will come from how Stellan s leverages the “volumescale eff ect in the way we procure parts” and uses common pla orms and parts.
“The smarter we are in using common components,” Tavares said, “the be er condi ons we create for procurement to do a good job in terms of cost nego a on.”
Electrifi ca on
Looking ahead, Tavares said he will rely on North America execu ves to deliver plans for rolling out more electrifi ca on in the U.S., an area in which FCA has lagged its compe tors.
Tavares said Stellan s could “contribute a lot” in this area and that “we are here to support and we are here to be part of this quality-of-life improvement of the U.S. society.” “If they want to get to a decision that is related to a signifi cant resource alloca on, it will come to the execu ve commi ee, we’ll discuss it and we’ll decide what we need to decide,” Tavares said. “But the guys who are going to propose it are the guys who know the market.”
