Stellantis: The Elkann Method to Break Away from the Tavares Era
Champagne, “cuddle therapy,” plant visits… At Stellantis, Elkann’s approach is shaking up the post-Tavares era
Champagne, “cuddle therapy,” plant visits… At Stellantis, Elkann’s approach is shaking up the post-Tavares era
STORY – The former Portuguese boss gave employees a hard time with his relentless cost-cutting drive. Now, the Agnelli heir has taken the reins. He has ushered in a change of style that comes as a relief to teams.
Sabring champagne in the cafeteria of the research and development center in Vélizy—a first at Stellantis. An event that would have been unimaginable just a few weeks ago, under the austere Carlos Tavares. The 130 senior executives from across Europe who gathered that Friday, December 6, at the request of John Elkann, the new chairman of the “interim executive committee,” could hardly believe their eyes. With this unprecedented gesture and his speech, the grandson of Gianni Agnelli, Fiat’s legendary leader, sought to open a new chapter, following the ouster on December 1 of the Portuguese CEO. John Elkann, who also heads the family holding Exor (the group’s main shareholder) and additionally chairs the board of directors, asked his top executives “never to compromise on the quality of Stellantis products or on relationships with our customers and stakeholders.”
“One of the meeting’s takeaways was to bring calm and serenity back to the group, without changing course,” explains one participant. Calm and serenity: it is a sharp pivot after years of nonstop tension within the group’s fourteen brands (Peugeot, Citroën, Fiat, Opel, Chrysler, Jeep, Ram, Maserati, etc.). To reinforce the point, John Elkann met with executive teams in every key country of the group—born from the merger of PSA and Fiat-Chrysler—while multiplying visits to historic plants like Rüsselsheim (Germany) for Opel and Mirafiori (Italy) for Fiat. A genuine goodwill tour. Each time, the Agnelli heir delivers positive news. “All plants will remain operational,” he promises, even though many of them are running at a slow pace due to a lack of orders. The change in tone is “astounding.” “It’s happening extremely quickly,” says a senior Stellantis manager.
Relations with governments have also taken on a new tone. Across the continents, John Elkann is holding reassuring meetings with heads of state, while over the past few years distrust of politicians in Italy and the United States had permeated every level of the world’s fourth-largest automaker. People remember the tense exchange in February 2024 between Carlos Tavares and Italian Prime Minister Giorgia Meloni, who had approached the Chinese company BYD about investing in Italy—Italy’s way of pressuring Stellantis, the country’s only carmaker, which was accused of not investing enough in Fiat’s homeland. “Those who are flirting with Chinese automakers to invite them to Italy are taking the same path as those who sold Volvo to Geely or MG to another Chinese manufacturer,” Carlos Tavares had retorted sharply.
Wooing Donald Trump
These shifts in tone also hint at deeper fractures. Strategic decisions taken by Carlos Tavares have not been slow to be abandoned by the new management in Europe and the United States, underscoring the doubts and disagreements they had been causing for some time.
The first turnaround: The shining star of electric vehicles in Europe now plans to be more cautious, aligning itself with competitors. After leaving the European Automobile Manufacturers’ Association (ACEA) at the end of 2022, Stellantis has now returned to the industry lobby. Like its rival Renault, it is calling for more flexibility in CO₂ emissions regulations, fearing the fines scheduled for late 2025 and aiming to better adapt to a still-weak demand for 100% electric vehicles.
Across the Atlantic, there has also been an about-face. During the U.S. presidential campaign, a standoff arose between Donald Trump, who portrayed himself as the champion of 100% “Made in USA” cars, and Carlos Tavares, who wanted to keep increasing production in Mexico. To show good faith to the new president, John Elkann’s team canceled the plan—right before Christmas—to cut 1,100 jobs at the Jeep plant in Toledo, Ohio. Stellantis hopes this will be enough to appease Ohio’s Republican Senator Bernie Moreno, who made his fortune in car dealerships. Moreno, who boasts of his close ties to Donald Trump, went so far as to challenge John Elkann by calling on him to sell Chrysler along with its brands (Jeep, Ram, Dodge, Chrysler) in order to make the carmaker 100% American again.
A Counterproductive Policy
There is also a marked change in policy toward dealerships, which serve as the group’s brand ambassadors to customers. Back at PSA, Carlos Tavares was already convinced that dealers were making too much money at the automaker’s expense. During COVID, he devised a commercial strategy focusing on online sales, cutting distribution costs by about 20%. “But cars are complicated to sell online. It’s not like selling printers!” points out one senior Stellantis executive who came from PSA.
Meanwhile, Carlos Tavares slashed financial support for dealers, including marketing funds (rebates, vehicle transport, etc.). “When dealers bought vehicles coming off the production line, they had to wait months for Stellantis to pay them. In some cases it lasted up to a year. Some Stellantis dealership investors faced huge challenges,” adds François Mary, the new chairman of the Stellantis Brand Dealership Association (AGGS). The head of a large automotive dealership group even told his teams never to take on a Stellantis franchise again to avoid the misery many investors had gone through.
Eventually, this policy became counterproductive. Dealers could hardly offer special deals in showrooms, and car prices rose. Customers simply stopped coming. The “pricing power”—charging more than competitors on the assumption that the brands alone justified higher prices—stopped working. “Peugeot’s market share, which used to hold steady at 18% in France, has fallen below 14%,” laments one dealer. “All Stellantis brands combined now have a lower market share in France than PSA had before the merger.”
Dealers Raise the Alarm
Several dealership representatives with the ear of the Peugeot family had already sounded the alarm in recent years, to no avail. Now they are seeing a remarkable change of direction. The new head of the Expanded Europe region, Jean-Philippe Imparato—an old ally of Carlos Tavares who is widely praised for his commercial expertise—has pledged to do whatever it takes to win customers back. “The new team has realized that a fully digital approach and an all-electric strategy are not feasible,” says François Mary. “To keep the factories running, they need volumes, and they need us!” adds one salesperson. “Today, the message is more like ‘If it’s good for the customer, go for it.’” They have even reintroduced diesel versions of several models favored by professionals.
More generally, relentless cost-cutting—Carlos Tavares’ signature—is no longer Stellantis’s alpha and omega. Inside the group, people are increasingly speaking out against the across-the-board cuts that had secured the revered “double-digit margins.” The Portuguese boss, who was a star in the industry at the time, had pledged to maintain these double-digit profits through the end of the decade. “That sacred ‘double-digit’ target was shocking,” confides a senior executive who long admired Carlos Tavares for what he did at PSA and Opel. “This obsession shifted onto suppliers with untenable payment deadlines. Internally, the ‘capping’ system—limiting the cash each branch could use every week and pitting them against each other—led to payment delays and disrupted supplier operations. Stellantis even had to pay penalties for that. It might make sense if a company is in real trouble, but that was never Stellantis’s situation.”
Putting the Brakes on Job Cuts?
Sweeping cuts have also thinned the ranks. Will the new management stop the exodus of managers and technicians who were strongly encouraged under Tavares to “reorient their careers”—in other words, leave the company? “Everyone regularly received an email inviting them to contact HR to learn about departure terms,” recalls a union representative. The last plan for job cuts, launched in France in July and involving 1,300 departures through a collective mutually agreed termination, reached its target by December 1, even though it could have remained open until August 2025. “On top of that, you also have age-related measures for older workers,” adds Frédéric Lemayitch, the CFTC representative at Stellantis.
Managers, union reps, and factory workers all share a simmering anger over the loss of skills resulting from these departures. They see it tied to repeated quality-related crises—issues with PureTech engines, faulty Takata airbags—that were never properly addressed. “Now, the company needs to restructure and refocus on its core skills,” hopes a senior engineering manager, nostalgic for a culture of excellence. “Cost-cutting led to severe design and quality problems.” Another Stellantis executive agrees: “We need to pause to keep the loss of expertise from endangering our 2025 and 2026 objectives.”
Although it’s too soon to measure the full impact of upcoming changes in the factories and offices, employee representatives note a desire to decentralize. “Highly vertical, the organization will become more horizontal,” predicts a Stellantis executive. “From now on, it will be managed by major world regions with more autonomy, as was the case at Fiat-Chrysler before.”
A Less Omnipotent CEO?
The next CEO likely won’t be the all-powerful boss who sent chills through the ranks. “Under Tavares, people toed the line,” says Frédéric Lemayitch of the CFTC. “He didn’t know how to delegate. He was feared and seemed to enjoy being THE boss. Now, the pressure has eased.”
But the automotive industry remains highly competitive, and many unknowns remain. The Darwinian approach favored by the former CEO was not without basis. “We don’t really know what will happen when Carlos Tavares’s successor arrives,” says Frédéric Lemayitch. Will the stated intention to ramp up production in Italy come at the expense of French plants? Will output at electric-only sites be scaled back? Will remote work—three days a week for office employees—be reduced?
Today, many people are wondering which levers shareholders will use to continue benefiting from the cash-generating machine that Carlos Tavares built. Under the former PSA boss, they never made as much money. In 2024, over €7.7 billion was paid out via dividends and share buybacks. Carlos Tavares had even planned more for 2025, targeting a payout ratio of 25% to 30%, compared to 25% up to now.
Shareholders will have to be patient if they hope to return to such prosperity. But there’s no question of allowing profitability to plummet. Even with a less rigid management style, costs will still have to be kept in check. The shareholders are counting on their chief representative, John Elkann of Exor, to keep a close watch.