Tavares: the man who made the shareholders' good and the corporate evil. This is how the newly resigned person was defined ceo of Stellantis, who left the command Sunday evening after four years of management precisely because of disagreements related to his strategy of cost minimization to maximize margins.
The numbers speak for themselves: on the one hand maxi-dividends, equal to 23 billion euros, assured to the shareholders, including himself. From the other letter of 13.000 employees laid off. The former CEO, moreover, basic salary from 10 million euros, in 2023 he received a salary of 36,5 million, with an increase of 56% compared to the 23,5 he pocketed in 2022. The terms of comparison are merciless: Oliver Blume, number one at Volkswagen, pocketed around 10 million euros, Ola Källenius (Mercedes-Benz) pocketed 12 and the CEO of BMW, Oliver Zipse, stopped at 9. A lot if compared to the "just" 5 of Luca de Meo, the helmsman of Renault and among the most talked about names as a possible successor to Tavares.
A Piazza Affari the title scores a rise of 3,6% trading at 12,528 euros per share and taking the top spot on the list (Ftse Mib at +0,8%). According to some observers, the buying was driven by the words of CFO Doug Ostermann who yesterday confirmed, as already indicated in the press release on Sunday evening, the guidance for 2024. Speaking at the Goldman Sachs conference, the manager also identified volumes and efficiency as the drivers for 2025 and reassured about dividends.
However, there was a decline in market share last month also due to production problems considered temporary at the moment. 'The reduction of inventories below the target level in the United States is positive, but at the same time we believe that it was achieved through a wider underproduction while the market share worsened again in November', commented the analysts of Intermonte, who added that 'the words of support for the remuneration of investors had already been expressed on the occasion of the third quarter results'. Intermonte, therefore, maintains the 'neutral' rating and a target price of 12,80 euros. Returning to the words of the CFO, the solid financial structure allows us to think about a possible buy-back (given the prices at which the stock is trading) that will be discussed when the final numbers for 2024 are available. Equita highlights how 'the consensus estimates recently collected by the company' already foresee a recovery in 2025', therefore the analysts believe that 'the buy-back can be confirmed even if the amount is significantly lower than the 3 billion approved in 2024'.
Elkann to Maserati: “Hard times”
Now the president John Elkann seems to want to show a different approach towards employees. While waiting to find Tavares' successor and while an interim has been set up executive committee, the nephew of Gianni Agnelli wanted to dedicate to the historic factory Maserati of Modena his first visit since Tavares' exit. Thetrident company is perhaps the one in the most difficulty of the group: between January and September 2024 the Modena hub churned out 220 cars, a quarter compared to an already disappointing 2023. In total, Maserati sold around 8.600 cars worldwide, 60% less than the previous year. “Our industry is going through hard moments” he acknowledged while speaking to Maserati employees.
However, this new mood gathered with the visit to Modena was overshadowed by the statements of the company's CFO, Doug Ostermann, according to whom the future leadership of the group should not change Stellantis' industrial course too much: "There have been disagreements between Tavares and the board in the last 3-6 months on the priorities and actions to be taken" in the short term. There were no disagreements on the long-term strategy".
Ex-Fiat plants suffer: less than 2024 thousand cars in 500
I am though all the Italian factories of the former Fiat to suffer, so much so that in 2024 the number of vehicles assembled in the country will not reach 500 thousand. If these production levels are maintained, according to estimates by AlixPartners, the places at risk in the automotive sector in Italy will be at least 50 thousand. Not by chance, the government has set a million vehicles as the target to be reached by 2030 for the six Stellantis plants. More than double.
Since 1970, how much has the company received from the state?
“At the next meeting with Stellantis on December 17, we expect concrete news that will reaffirm the centrality of our country in the group's industrial plan,” Adolfo Urso reiterated to the Chamber. The Minister of Enterprise also announced that, after the 4,6 billion cut to the car fund envisaged in the budget, the approximately 200 million remaining for 2025 will be integrated up to 750 million, all destined to support business investments, nothing instead for purchase incentives. The meeting will be preceded on December 12 by a meeting in Turin between the metalworkers' unions and the head of Europe of Stellantis, Jean-Philippe Imparato, one of the possible replacements for Tavares.
The relationship between Stellantis and the government is part of the socio-economic fabric of Italy: the automotive sector represents more than5% of Italian GDP and about three-quarters of the companies in the sector have to do with Stellantis, more or less directly. According to some estimates, from 1970 to today, the various governments have paid into the coffers of what was once the Fabbrica Italiana Automobili Torino, well over 220 billion euros. More recently, from 2016 to 2024, Stellantis, formerly FCA, received about 100 million in state aid, including funds for the technological updating of the plants and support for the redundancy fund for workers. From 2014 to 2020, it collected about 446 million euros, of which 263 million were paid by the company itself. Furthermore, during the pandemic, the group benefited from a state guarantee of 6,8 billion euros, committing to maintain and increase investments in Italy.
In 2025, redundancy payments for 12 workers expire
Employees in Italy went from just under 53 at the birth of Stellantis, in January 2021, to an estimated just under 40 at the end of the year: one in four gone. In 2024, there will be approximately 3.000 incentivized exoduses. Another 1.500 last year and 3.000 in 2022. The outgoing workers were able to count on sums ranging from 30 to 130 thousand euros (depending on role and seniority). Therefore, calculating an average severance pay of 70 thousand euros per worker, this is approximately 500 million euros allocated in the last three years to reduce employees in Italy. Extensive use was then made of the redundancy fund. From 2014 to 2020, FCA received 183 million from the State. From 2021 to May 2024, the State's expenditure for the fund rose to 703 million. In 2025 the fund will expire for about 12 thousand Stellantis employees and for just as many in related industries: without an extension the only prospect is job loss.
Investments in Research and Development: Half of Volkswagen
The group complained that productivity in Italian factories is 38% lower than in Spanish factories: taking 100 hours per vehicle in Italy, 62 would be enough in Spain. But the issue is also how many investments have been made by Stellantis to make factories and cars more competitive. In the last three years, according to the balance sheets, the group has spent a total of 19 billion on research and development, an average of 3,8% of its annual revenues. In 2023 alone Volkswagen, its main competitor in Europe, has invested 21,8 billion in innovation, 8,1% of its turnover.
Dividends rain for the members. Over 3 billion for the family
Instead, Tavares' strategy has proven to be long-lasting very profitable for members. The manager kept the factories' production to a minimum, taking advantage of every peak in demand for cars to raise prices. The plan has displeased governments and employees, but has transformed Stellantis into a money-making machine, capable of grind profits. Strengthened by these profits, in four years the group born in 2021 from the merger between Fiat-Chrysler and Peugeot has distributed to shareholders approximately 23 billion: over 17 billion in dividends (including the split of Faurecia shares) and 5,5 billion in share buybacks. The Agnelli-Elkann family, the first shareholder of the house with 14,9% through the Exor safe, has cashed in coupons for over 3 billion (including shares of components company Faurecia). The expected improvement in performance is expected to enable it to pay a dividend in 2025, has Ostermann. “Our balance sheet can support the current situation and respect the ranges set on liquidity,” said the CFO, specifying that there is “confidence in the company’s ability to generate liquidity and to achieve a good performance in 2025”. The company has also achieved significant progress in reducing inventories in the United States with 310 thousand units at the end of November.
