Carmaker boss seldom in the spotlight takes over a $51bn empire
Carlos Tavares has shown little desire to a celebrity CEO such as Iacocca or Marchionne
New York/Detroit/Milan — The newly minted merger of Fiat Chrysler Automobiles and PSA Group is poised to raise the global profile of an under-the-radar CEO who will lead a vast and hugely complex carmaker with quiet intensity.
The market debut of Stellantis, the group formed by the Italian-American and French motor manufacturers, is a coming-out party for its leader, Carlos Tavares. The shares surged as much as 8.5% in Milan on Monday, valuing one of the world’s largest-volume carmakers at more than €42bn ($51bn).
Tavares has spent a 40-year career rising up the ladder of an industry that birthed the modern-day celebrity CEO, engineering impressive turnarounds while largely going unrecognised taking commercial flights in and out of Detroit.
The wiry, hyperactive 62-year-old has shown little desire to be another Lee Iacocca, Dieter Zetsche, Sergio Marchionne or Carlos Ghosn. But whether he comes around to the spotlight or not, he will get much more of it steering an empire of roughly 400,000 employees and 14 brands into an uncertain future, where cars increasingly run off batteries and software and the combustion engine meets its demise.
“He’s not selling Carlos, and he doesn’t want to,” said Jim Press, a car executive who worked with Tavares when the latter headed Nissan Motor’s North American operations. “He develops people and organisations. The guy is a great businessman.”
Automotive mega-mergers have failed in simpler times. Before Daimler’s disastrous combination with Chrysler around the turn of the century, PSA’s archrival Renault acquired American Motors in a doomed deal the French company reversed from a little over a decade later.
For Tavares to succeed with Stellantis, he will have to do more than just streamline and slash costs, the playbook he followed in bringing PSA back from the brink. The self-described “performance psychopath” also will have to prove his product chops and catch up on electrification in an era when little seems to matter more to investors.
After a more than two-year effort to combine the companies, Tavares said on Monday that management will focus on achieving the €5bn of annual savings projected from the merger. “You can trust our management in our execution capability,” he said during a listing ceremony. “We are here to get the job done.”
Tavares displayed his early passion as a 14-year-old volunteer at the Estoril track near Lisbon, where he was born and raised. He has since competed in more than 500 races as an amateur driver and has said he became an engineer because he lacked the talent and money to race professionally. He was scheduled to drive a Lancia Stratos at an annual rally in Monaco this month before Covid-19 forced its cancellation.
After graduating from one of France’s top engineering schools, Tavares started his career at Renault in 1981. He headed up partner Nissan’s North America operations for two years before becoming number two to Ghosn at Renault in 2011.
In an unusual power play for a top job, he told Bloomberg News in 2013 that since Ghosn was planning to stick around, he would be interested in running General Motors or Ford. He left Renault within weeks and took the helm of almost-bankrupt PSA six months later.
The French state and China’s Dongfeng Motor Group bailed out PSA by participating in a share sale and a €3bn capital raise. Tavares pruned the model lineup, cut costs and raised vehicle prices. PSA turned its first annual profit in three years.
He applied similar tactics with Opel and Vauxhall, the brands GM cast off to PSA in 2017 after racking up about $20bn of losses over two decades. By slashing development spending and buying out thousands of workers, he swiftly pushed those operations into the black.
“The Tavares factor was probably the most underestimated” of PSA’s 2014 turnaround plan, said Societe Generale car analyst Stephen Reitman. “Opel Vauxhall was seen as maybe a step too far, but he proved that by patiently going around and reasoning with people, they would reconsider positions that had contributed to 20 years of losses.”
He proved that by patiently going around and reasoning with people, they would reconsider positions that had contributed to 20 years of losses.Car analyst Stephen Reitman
Those negotiating skills will be put to the test quickly, with Tavares due to meet with Italian labour union leaders on Wednesday about the impact Fiat Chrysler’s merger will have on employment.
Bloomberg News spoke with half a dozen people who have worked closely with Tavares. They describe him as ultracompetitive with a dogged attention to detail. He does not tolerate meetings starting late or dragging on and asks underlings to make presentations in five slides or fewer.
Tavares shuns the annual gathering of the business elite that Ghosn frequented in Davos, Switzerland, and shows up to glitzy car shows in scuffed-up dad shoes. He often spends weekends tinkering on cars at his suburban Paris home.
As head of Stellantis, he will answer to dynastic shareholders — the Agnellis, led by chairman John Elkann, as well as the Peugeots – and politics will play an outsize role. The French state will retain a stake in the merged company, and Italy’s deputy economy minister has hinted its government may acquire a shareholding as well.
PSA’s outgoing chairman Louis Gallois has said that since Tavares’s roots are in Portugal, where he owns a vineyard and small vintage-car business, he’ll be an effective neutral arbiter.
Stellantis will be an amalgam of model lines with a strong presence in North America’s lucrative truck and SUV segments, thanks to Fiat Chrysler’s Ram and Jeep divisions. PSA’s revitalised Peugeot and Citroen brands have also excelled in Europe and are the envy of Renault.
Yet the company will not have much of a foothold in the luxury-car business. The Alfa Romeo and Maserati lines are struggling and PSA’s DS is tiny. Fiat Chrysler and PSA have also stumbled in China’s vast car market.
“Tavares knows that if the Chinese market is a medium- or long-term goal, Europe is right now Stellantis’s most compelling challenge,” said Carlo Alberto Carnevale Maffe, a professor at Bocconi University in Milan. “He needs to act by cutting costs, recovering profitability and investing in a range of technologies.”
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