Is it Time to Break Up Stellantis?

There were high hopes when Fiat Chrysler Automobiles and the PSA Group officially completed their merger on January 16, 2021. But things haven’t worked out quite as planned, the automaker now known as Stellantis struggling to reverse a sharp decline in sales and earnings. While the company insists it’s on the mend, some wonder if it would be better to consider this a failed experiment and break the company up. That notably includes former CEO Carlos Tavares. Headlight.News has more.

With a combined 14 brands Stellantis emerged as the fourth-largest automaker in the world when it was formed by the merger of Fiat Chrysler Automobiles and France’s PSA Group nearly five years ago. In its first three years it appeared to be living up to expectations, apparent synergies resulting in big savings that went directly to the corporate bottom line.

Things took a turn for the worse in 2024, however, sales and earnings entering a precipitous downward spiral that, 10 months ago led to the sudden resignation of CEO Carlos Tavares, the man who helped pull the Euro-American merger together.

It took nearly half a year to name Tavares’ replacement, but despite signs of a turnaround under new chief executive Antonio Filosa, sone skeptics wonder whether Stellantis ever will live up to its initial promise. That includes Tavares who, in a new book, said he is “worried” that the alliance between the nationalistic elements of the company may now “break” apart.

Sour grapes or informed insight?

After initially delivering strong returns by focusing on cost-cutting and other synergies, critics contend Tavares mishandled the trans-Atlantic company and, indeed, earlier in 2024 he publicly acknowledged that some of the problems leading up to its near-meltdown were the result of his own “arrogance.”

What’s clear is that a mix of marketing mistakes, product failures and departures by a number of key executives resulted in a sharp decline in sales and earnings. The problem was particularly severe in the U.S. market where, among other things, demand for the Ram 1500 pickup, traditionally the cash cow for the U.S. side of the company, failed to generate the anticipated consumer demand after a major makeover for the 2025 model year.

Some might question whether the 67-year-old Tavares now is trying to settle scores after being put into a position in which he felt he could no longer stay with the company he helped create. His resignation last December came, he previously indicated, when the Stellantis board refused to back the turnaround plan he put in place.

A logical successor

When the Stellantis board finally named a successor for Tavares last June they went with Italian-born Antonio Filosa, the executive brought over barely two years earlier to run the Jeep division. He was appointed North American chief operating officer shortly before Tavares resigned.

The 52-year-old Filosa was the “logical and rational” choice, Tavares acknowledged in a new book on his time with Stellantis, having risen to become one of the former CEO’s own top choices for an eventual successor.

Even before assuming the top spot, Filosa began making a number of critical moves in the U.S. market, luring back some key executives such as Tim Kuniskis, now head of Ram and chief North American strategist. A variety of product changes have been authorized, including delays and cancellations of EV programs. And there have been signs of a payoff with recent improvements in sales and earnings.

Even so, Tavares is questioning whether the multinational automaker’s fate has already been sealed.

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Maintaining a balance

“I am worried that the three-way balance between Italy, France and the U.S. will break,” Tavares said in the new book published initially in France.

Part of the problem is that Filosa and his management team are being pulled in different directions “every day” by the various national elements of the company. In particular, he wrote, “With me gone, I am not sure that the French interests that I always had at heart — whether you believe it or not — will be as well defended.”

Ironically, some observers say that was part of the problem. By focusing so much on the French side of the company Tavares ignored the rest, notably the U.S. operations that were initially the corporate cash cow. Much of what Filosa has done since being named North American COO has been aimed at reviving the region’s operations. In a symbolic move, he has made the old Chrysler headquarters in Auburn Hills, Michigan his primary HQ, rather than France, as Tavares had done. In more practical terms, moves like reviving the Hemi V-8 option for the Ram 1500 have resulted in solid improvements in sales and earnings. Meanwhile, Stellantis this month said it would invest $13 billion in the U.S. in terms of new products and plants.

A possible break-up

The question is whether this nascent turnaround will be enough – especially if salvaging U.S. operations comes at the expense of other Stellantis regions. Under Filosa, the company has taken some steps that seemed far less likely when Tavares was in charge, such as temporarily idling some of its European plants due to weak demand.

For his part, Tavares warns in his book that it simply may not be possible to hold together the disparate regional interests that came together to form Stellantis. The French government, for one, remains a strong influence on the company and sees it as much as anything a job creator, rather than just a source of revenue.

What might happen if Stellantis can’t stay united? “One possible scenario, and there are many others, could be a Chinese manufacturer one day making a bid for the Europe business with the Americans taking back the North America operations,” he said.