New Stellantis CEO Antonio Filosa faces slew of challenges on day one

DETROIT — “Mediocrity will not be well worth the journey.”

That was a part of incoming Stellantis CEO Antonio Filosa’s first public message after being named to steer the worldwide automaker. It was a mantra a long time within the making, as he spent 25 years climbing by the corporate’s ranks, ranging from a task as an evening shift paint store supervisor in Spain.

The quote additionally referenced late Fiat Chrysler CEO Sergio Marchionne, a mentor of Filosa’s who’s revered within the firm. Marchionne unexpectedly died in 2018, years earlier than the automaker merged to kind Stellantis, the father or mother for manufacturers comparable to Jeep, Ram, Fiat and Chrysler.

A number of former and present Stellantis executives and workers who’ve labored with Filosa highlighted his connection to Marchionne when talking with CNBC. Additionally they described him as a fascinating, collective chief who is aware of the enterprise nicely, from the manufacturing unit flooring to C-suite workplaces, however who faces a slew of challenges and exams forward.

As Filosa formally steps into the CEO function on Monday, he might want to channel Marchionne — considered as a dynamic government and thinker who saved Italian automaker Fiat and America’s Chrysler — to achieve success in turning across the embattled carmaker.

The newest CEO, Carlos Tavares, who spearheaded the merger to kind Stellantis, abruptly resigned in December amid disagreements with the corporate’s board, yearslong gross sales declines and a 70% drop in internet revenue final 12 months. He, like Marchionne, was thought of a dynamic CEO by these inside and outdoors the corporate, however many thought he targeted an excessive amount of on value cuts, to the detriment of the enterprise.

Along with monetary points, business consultants mentioned Filosa might want to proceed to fix bonds with sellers, politicians and workers that have been broken throughout Tavares’ tenure. And he’ll need to deal with the corporate’s funding plans between conventional automobiles and “electrified” fashions comparable to hybrids and EVs.

“We have to handle the transition, proper? It is not a secret that electrical automobiles will probably be [a] robust a part of the longer term, proper? Not just for Stellantis, however for the automotive business itself,” Filosa, then-Stellantis’ head of the Americas, advised reporters in January. “The tempo and the pace, most likely one thing that must be barely reassessed.”

Filosa, at the moment, mentioned it is going to be on the brand new CEO to resolve the tempo. He described the corporate’s points as “a multitask problem” for whoever the board would appoint, which in the end was him.

Staff have been distraught over cuts and layoffs, whereas the corporate’s franchised retailers have been furious about Stellantis’ gross sales and market share losses below Tavares. The Stellantis Nationwide Seller Council in September penned an unprecedented open letter condemning Tavares’ actions.

“Your personal distribution community, your vendor physique, has been left in an anemic and diminished state,” Kevin Farrish, a vendor in Virginia who led the council, wrote within the letter.

Michael Bettenhausen, a vendor in Illinois who succeeded Farrish, has spoken fondly of Filosa however mentioned there may be nonetheless a number of work to get finished.

“We have to mutually work collectively and dive into all the problems right here within the North American operations, and we sit up for Antonio nonetheless being part of these discussions,” he mentioned.

Stellantis’ world gross sales below Tavares fell 12.3% from 6.5 million in 2021 — the 12 months the corporate was fashioned — to 5.7 million in 2024. That included a roughly 27% collapse within the U.S. in that interval to 1.3 million automobiles bought. The automaker dropped from fourth is U.S. gross sales to sixth, falling from an 11.6% market share to eight% throughout that time-frame.

Filosa — a local of Naples, Italy — mentioned in January the highest precedence for the U.S. was to develop retail market share, which incorporates gross sales to prospects versus these to fleets or companies.

“We have to try this. It is not a perception; it is a want,” he mentioned. “The U.S. retail market share actually measures your potential to organically [grow sales].”

The automaker stays in a product dearth, bringing its total gross sales down roughly 12% through the first quarter of this 12 months in contrast with the identical interval a 12 months earlier. The corporate declined to launch its year-to-date retail gross sales.

However new merchandise such because the upcoming redesigned Jeep Cherokee, further Ram 1500 pickup truck fashions and a brand new gas-powered Dodge Charger are anticipated to spice up gross sales, in addition to the automaker’s prime line.

Stellantis’ income has grown because the firm was fashioned however plummeted 17.2% 12 months over 12 months in 2024 to 156.9 billion euros ($180.6 billion), whereas different automakers comparable to Common Motors and Ford Motor noticed notable will increase of their prime traces.

“Filosa steps into the CEO function amid vital challenges for the corporate,” RBC Capital Markets analyst Tom Narayan wrote in a Could 28 investor be aware. “His quick priorities embody revitalizing the corporate’s efficiency within the US market, streamlining Stellantis’ in depth 14-brand portfolio, and mending strained relationships with sellers, unions, and governments.”

“I believe it is a logical, credible alternative,” Tavares advised Bloomberg in late Could in his first interview with worldwide media since leaving the corporate. “Hopefully, he will probably be correctly supported by the board. So let’s have a look at.”

Since being introduced as CEO on Could 28, Filosa has visited most of the automaker’s vegetation within the U.S., Canada and Europe. He was reportedly chosen following a six-month search that included different inner and exterior candidates.

His public feedback relating to his new place have painted him as a humbled, grateful government and father who takes delight in connecting with folks.

“I’m actually honored to be appointed CEO of this nice firm, Stellantis. It has been my residence for 25 years. This place is in my blood,” he mentioned a Could 28 LinkedIn publish, referencing Marchionne.

A handful of present and former Stellantis executives described Filosa as an “participating chief” and “listener” who’s significantly relaxed inside vegetation and talking with workers — very like Marchionne.

“I’ve labored facet by facet with him. … We grew up below Sergio,” Stellantis’ world head of design, Ralph Gilles, advised CNBC. “He is a folks individual. He is a visionary, he is energized, he is younger … and he is curious. He is an awesome listener. I really like his problem-solving skills, and for me, he loves design.”

Marchionne would consult with his executives as “children,” lots of whom, like Gilles and Filosa, he appointed to their first high-profile management positions. Others nonetheless with Stellantis embody Ram CEO Tim Kuniskis and Chief Advertising and marketing Officer Olivier Francois.

“Antonio’s superior,” Kuniskis, who unretired after a seven-month hiatus final 12 months, advised CNBC. “He is one of many driving forces for me wanting to come back again.”

Stellantis CFO Douglas Ostermann earlier this month touted Filosa’s background in manufacturing and constructing the corporate’s Latin American enterprise, which has remained a excessive profitability area for the corporate.

“He is a really sort of open chief that I believe actually works nicely with throughout the group, throughout folks, throughout manufacturers, sort of a relationship builder,” Ostermann mentioned throughout a Bernstein occasion.

Upon Filosa’s appointment, Bernstein analysts in an investor be aware described him as a “protected pair of arms” however a comparatively uninspiring alternative for buyers in contrast with an out of doors rent comparable to ex-Apple CFO Luca Maestri, whom the corporate was reportedly contemplating.

“I believe buyers have been fairly excited in regards to the prospect of bringing in someone from the surface,” Bernstein analyst Daniel Roeska advised CNBC. “Not that there wasn’t anyone inside, however after sort of such a giant mix-up, buyers thought the concept of bringing one thing from the surface was a great one.”

Filosa hasn’t had a lot expertise in such a high-profile function, not like Marchionne and Tavares, who have been examined automotive veterans. He got here up by the corporate’s Latin American operations and has solely served a short while in North America — its most important market. Whereas Italian, he additionally has restricted work time in Europe, the automaker’s second most vital area.

Two sources who agreed to talk on the situation on anonymity to have the ability to communicate freely additionally mentioned he is a nostril to the grindstone chief who could be demanding at instances, just like his predecessors and different CEOs.

Filosa additionally might want to restore investor confidence, which each Marchionne and Tavares have been relaxed doing. Three sources, together with two firm insiders, mentioned he would not but have the CEO prowess like his predecessors, one thing which will include expertise.

UBS analyst Patrick Hummel famous in a monetary be aware final month that Filosa’s interplay with the monetary group additionally has been “restricted” to a capital markets day in June 2024.

Traders did not react strongly to the CEO alternative, primarily based on the corporate’s inventory worth. When Filosa was introduced as CEO on Could 28, U.S.-listed shares of the inventory declined 3.2%. Since then, the shares are off roughly 10% amid a litany of outdoor components.

The every day inventory decline is definitely just like when Marchionne made his “mediocrity” feedback through the firm’s first investor day after combining Chrysler and Fiat to make “Fiat Chrysler Vehicles,” or FCA, on Could 6, 2014. Shares fell 3.9% that day.

Marchionne, a philosophy main who was identified for his astute remarks, was discussing the challenges forward for the automaker and altering automotive business, together with not chasing unprofitable companies — which Filosa and Stellantis should proceed to handle.

“I advised you this morning that our FCA tradition responds higher when it’s confronted with objective and with problem,” Marchionne mentioned. “And our plan has objective as a result of when all is alleged and all is completed, mediocrity will not be well worth the journey.”

Correction: This story has been up to date to appropriate the title of the Stellantis Nationwide Seller Council.