Analysts say the company’s North American business has been hurt by repeated price increases
from Brad Anderson
August 22, 2024 at 11:30 am
- Stellantis’ operating profit fell by 40 percent in the first half of the year.
- During his summer break, Tavares is dealing with problems at the company’s North American office.
- Stellantis recently announced that it would cut over 2,400 jobs at its truck assembly plant in Warren.
Stellantis’ big boss, Carlos Tavares, is in the US trying to develop a strategy to turn around the company’s North American business.
The automaker’s adjusted operating profit fell 40% to 8.46 billion euros ($9.28 billion) in the first half of the year and its shares have fallen nearly 50% in the past five months. Tavares called the brand’s half-year results “humbling,” noting that its North American business suffered from high vehicle inventories and production problems.
Read: Stellantis profits to collapse in 2024, some brands could be closed, warns CEO
Tavares typically visits the North American operations every four to six weeks, but makes this trip during his summer break. According to an anonymous source familiar with ReutersThe CEO wants to make it clear that he is “personally taking care of the matter” and points out that “the North American activities essentially finance the rest of the group”.
During his trip, Tavares will meet with top executives and dealers and visit a factory in Detroit. He is expected to develop a strategy by the end of the week and may look to reduce inventories and adjust vehicle production.
Jefferies analyst Philippe Houchois believes Stellantis’ North American business was badly hurt by the decision to raise prices when consumers were unwilling to pay for it. “They lacked the pragmatism to address the inventory buildup immediately. They should have priced more tactically to avoid that,” Houchois said.
Tavares blamed himself for not moving quickly enough to address problems with the brand’s North American operations at the investor meeting in Michigan earlier this year. “We were arrogant,” he said. “I’m talking about myself, no one else.”
Stellantis has already decided to cut 2,450 jobs at its truck assembly plant in Warren, near Detroit, and will also offer a round of voluntary severance packages to its U.S. employees. Tavares also said there are inefficiencies at two of the company’s local plants that need to be addressed.
