Carlos TavaresThere was a point in time when Carlos Tavares could do no wrong. He was seen as the miracle turnaround man for Groupe PSA when it was literally down and out in the period of the global slowdown for 2009 to 2013.
Not only did Tavares bring Peugeot back from the brink but took the French automaker to the next level of growth by spearheading the buyout of Opel and Vauxhall from General Motors. This was in 2017 but the bigger thing was yet to come in 2021 when the merger with Fiat Chrysler Automobiles (FCA) was accomplished to create Stellantis.
Within a decade, Tavares had completely changed the face of Groupe PSA, the maker of the Peugeot and Citroen brands, to a formidable entity with a host of brands in its portfolio. He was now perceived as the virtual colossus of the global automobile industry who had achieved the near impossible and would now take Stellantis from strength to strength.
However, the script began to go awfully wrong from the beginning of 2024 with sales in North America falling dramatically thanks to a clearly flawed pricing strategy for brands such as Jeep, Ram and Dodge. The Stellantis scrip also suffered in the process and the halo surrounding Tavares was now beginning to diminish rapidly.
Tipping point
The leadership team was clearly unhappy and made known a few weeks ago that a new CEO would be in place by 2026 but the exit came a lot faster on December 1. Media reports suggest that things had reached a point of no-return with the CEO and the Board of Directors at loggerheads.
Whether he was asked to go or decided to leave on his own is irrelevant — the reality is that Carlos Tavares has wrapped up his innings and Stellantis is headless, at least for the foreseeable future. There is, of course, a sense of shock since he was seen as the person holding the gigantic entity and its portfolio of companies together.
Can his successor be as competent is the million dollar question? His critics may have flayed Tavares for his myopic approach to North America but none of them will even dare to say that he did not have the mettle to lead Stellantis.
Yet, his style of working did not exactly draw a horde of admirers. According to the industry grapevine, there were people who apparently complained that the pressure was unbearable while working with him. There was no question that he was ruthless when it came to running a tight ship and keeping costs in check.
To this writer, the first sign of Tavares’ razor-like focus came to the fore when he addressed a select roundtable of journalists in Chennai. This was sometime in 2011 when he was the Chief Operating Officer of Renault and second to the charismatic Carlos Ghosn on the hierarchy scale.
Core model strategy
During this roundtable he was categorical about the fact that the French automaker did not need a bunch of cars in its portfolio as this would only “fragment” its energy and financial resources. “We want to be focused on a core model strategy of just 7-8 cars and ensure that each of them is appealing and competitive within its segment,” he said.
Tavares reiterated that whatever Renault needed to bring into the market had to be a great car which could “destabilise" competitors. Doing too many cars was “a waste of energy and resources” and it was important for the company to stay focused doing great products over the next five years while creating top-class dealership service standards across India.
This was the time the Duster was scorching the sales charts but Tavares cautioned that this was not the end of the journey. “My major concern about India is that we will be enjoying our success a little too much. In sports, it is not enough to win just one championship but also the second,” he said.
The next important step for Renault was to sustain the momentum of Duster which had helped improve its market share and profitability. “All this is fine but what next? We do not have to grow by two points every year but how do we extend this good work in India for the next ten years? I think that is the question we need to ask ourselves,” Tavares said.
Adieu to Renault
Two years down the line, he had quit Renault when he had made known in an interview that he was keen on heading companies like General Motors given his talent and experience. Naturally, this did not go down well with Renault and Tavares subsequently joined Groupe PSA where he worked relentlessly to take it to new heights.
His dramatic exit is now a reminder that finding top leaders is a tall order in the global automobile industry. There was a time when the other Carlos — Carlos Ghosn — was the undisputed monarch with oodles of charisma to boot. As CEO of Renault-Nissan, he was riding high till his dramatic arrest in 2018 pretty much finished his career.
Ghosn constantly maintained that he was innocent and blamed Nissan for implicating him in a false case of financial impropriety. He was jailed and spent time in solitary confinement before escaping to his hometown, Beirut, in a dramatic sequence of events.
Ghosn later made known in a press conference that had it not been for his arrest, Renault-Nissan would have merged with FCA and created a virtual powerhouse in the automobile arena. Tavares was quick to grab this opportunity instead even while FCA had first reached out to Renault of the post-Ghosn period with this merger offer.
Visionary leaders
The other CEO who was one of a kind was Sergio Marchionne who pulled off the impossible and rescued a beleaguered Fiat when it seemed that it was doomed to die. He then made the most of the opportunity that the global slowdown offered him and snapped up Chrysler to create FCA with the Jeep as its showstopper brand.
Marchionne, like Ghosn, was a visionary who saw the bigger picture quickly. He was aware that the global automobile industry was in dire need of consolidation and, therefore, thought it fit to reach out to GM for a merger with FCA. Even though nothing came out of this, Marchionne knew that challenging times lay ahead. The FCA chief died in 2018 at the age of 66 leaving behind a big leadership void.
Would Tavares also be considered a visionary? He was definitely a class apart from many other CEOs in terms of strategic thinking and effective execution. To create a mammoth entity like Stellantis in the aftermath of rescuing a vulnerable PSA and then planning big is no mean achievement.
It required courage, faith and determination which Tavares brought to the table. He also had the foresight to pick up a stake in Leapmotor of China where the intention was to retail its cars in Europe, ASEAN and India.
Hubris the cause?
It is a moot point if such leaders be it Ghosn, Marchionne or Tavares also become the victims of hubris since they are just way better than the rest. In reality, the bigger challenge is taking the team along and not be a lone ranger since this will be a certain recipe for disaster eventually.
Right now, automakers across the world are facing huge challenges arising from a host of uncertainties in a volatile world. Wars are happening in Europe and West Asia while China is on the rampage with its electric vehicle onslaught. Japan is busy sewing up alliances while a belligerent US is busy planning hefty tariffs on a host of countries with China being the chief target.
Candid and forthright
From a journalist’s point of view, Carlos Tavares will be missed since he was candid and did not back off from awkward questions. During the 2019 Frankfurt Motor Show, he responded to this writer’s question on the slowdown happening in India and its implications for his company. The merger with Stellantis was still two years away and he was Chairman of Groupe PSA which had positioned the Citroen as its face for India.
“When you are working in this industry for a long time like me, there are a whole lot of ups and downs. We have a very clear strategy for India and things are moving. I think it is more important to stay focused on getting things done properly, in managing things and making sure that products are of the right quality,” reiterated Tavares.
