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Stellantis CEO Cites Failures in U.S. Manufacturing Plants

But he says his company is ready to compete head-on with Chinese EVs.

Fabio Ferrari/LaPresse via AP, File

MILAN (AP) — Stellantis CEO Carlos Tavares expressed dissatisfaction at the operation of some U.S. plants on Thursday, and took responsibility for not reacting quickly enough to address that issue, the problem of inventory backup, and tackling a "suboptimal" marketing strategy.

Tavares said the three issues, which hit as the company struggles with lower shipments and revenues, were not tackled in a timely fashion out of arrogance.

"When I am saying we were arrogant, I'm talking about myself, nobody else. I'm talking about the fact that I should have acted immediately, recognizing that the convergence of those three problems was there, and we had to set up a task force to address them,'' Tavares told an investor conference in Auburn Hills, Mich.

"If you have a marketing strategy that is suboptimal, at the moment when your inventory grows and your plants start having problems, you think that you can fix each of the issues in isolation, but if the three things happen at the same time, it is more difficult,'' he acknowledged.

He said the plant inefficiencies in terms of supply, quality and costs were becoming clear in the fall of 2023 as market conditions deteriorated when the automaker and its U.S. competitors were locked in negotiations with the United Autoworkers Union.

In the meantime, he said, the issues at at least two U.S. plants, which he did not identify, were being addressed. "It is not rocket science. It is something we have done tons of times, everywhere in the world,'' he said, adding that the problem needs to be fixed "in the context of the U.S. environment."

Stellantis, the maker of Jeeps and Ram pickup trucks, has been struggling, with first-quarter global shipments falling 10% from a year earlier to 1.34 million, and revenues dropping 12% to 41.7 billion euros ($44.8 billion). Sales in the U.S., a big cash generator, were down 14%, as the market share dropped to 7.7% the lowest in years.

The carmaker, which was formed in 2001 from the merger of Fiat-Chrysler with PSA-Peugeot, in February replace the North American chief operating officer with Carlos Zarlenga, who was president of Stellantis Mexico.

Tavares said the company's multi-energy platform strategy, including fully electric and plug-in gas-electric hybrids, will help Stellantis' competitiveness in the face of the Chinese electric vehicle offensive, which he said has been faster than he expected. At the same time, automakers are grappling with vastly different government policies on electric vehicles even within the European Union, which he said has resulted in market shares that vary from 2% in Italy, 15% in France and 40% in Scandinavia.

Still, he said the world's fourth-largest carmaker would "fight to stay competitive" rather than rely on tariffs as protection.

"We are a global company, we are exposed all over the world, in Latin America, the Middle East, in Asia, to the harshest Chinese competition. So we are going to fight to be as competitive as we should be, in the performance of the product, in the range, in the affordability,'' he said.

Stellantis has a 51% stake in Chinese electric vehicle startup Leapmotor which will begin selling EVs in nine European countries later this year.

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