In this articleSTLAFollow your favorite stocksCREATE FREE ACCOUNTStellantis CEO Carlos Tavares holds a news conference after meeting with unions, in Turin, Italy, March 31, 2022.Massimo Pinca | ReutersDETROIT – Since spearheading a merger to create Stellantis in 2021, CEO Carlos Tavares has been on a cost-cutting mission. That’s beginning to pay dividends for the company and investors.How the trans-Atlantic automaker expects to keep that momentum amid uncertainty surrounding all-electric vehicles and increasing competition from Chinese automakers is expected to be in focus this week as Tavares leads the automaker’s investor day Thursday.Tavares and other executive are expected to address Chinese competition, capital discipline, forthcoming products, software initiatives, and potentially, further cost reductions as the company aims to achieve ambitious financial targets by 2030.When Tavares’ PSA Groupe merged with Fiat Chrysler in January 2021, the freshly combined company set out to reduce spending by 5 billion euros, or about $5.4 billion, annually. It’s a target the company says it will achieve in 2024, a year ahead of schedule.More recently, Tavares has said the parent of brands like Ram and Jeep needs to remove 40% of its costs to be able to profitably produce and sell EVs to mass-market consumers, citing the need for affordable models despite higher costs to manufacture the vehicles.”We are not in the race to transition to EVs, but in a race to cut cost on EVs,” Tavares said in late May during a Bernstein investor conference.The cuts are part of Stellantis’ strategic plan to increase profits and double revenue to 300 billion euros by 2030. The plan also includes targets such as achieving adjusted operating profit of more than 12% and industrial free cash flow of more than 20 billion euros.The cost-saving measures have included reshaping the company’s supply chain and operations as well as headcount reductions.Several Stellantis executives described the cuts to CNBC as difficult but effective. Others, who spoke on the condition of anonymity due to potential repercussions, described them as grueling to the point of excessiveness.Since the merger was agreed to in December 2019, Stellantis has reduced headcount by 15.5%, or roughly 47,500 employees, through 2023, according to public filings. Additional job cuts this year involving thousands of plant workers the U.S. and Italy have drawn the ire of unions in both countries.Meanwhile the associated billions in operational savings have helped to increase the automaker’s adjusted operating income by 31% from 2021 through last year. Its adjusted profit margin is also up, rising 0.4 percentage point during that time frame to 12.8%.Stellantis Chief Technology Officer Ned Curic said the company is operating far more efficiently than before, including “proper system engineering” to ensure it’s optimizing design and function for its new vehicles.Curic, who joined the company from Amazon in 2021, said headcount reductions, including laying off about 400 U.S. engineers in March, come after the company completed many of its systems for the next decade.”We’ve been cutting headcounts, but we really don’t need that many,” he said during an interview last month, adding the compa …
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[mwai_chat context=”Let’s have a discussion about this article:nnIn this articleSTLAFollow your favorite stocksCREATE FREE ACCOUNTStellantis CEO Carlos Tavares holds a news conference after meeting with unions, in Turin, Italy, March 31, 2022.Massimo Pinca | ReutersDETROIT – Since spearheading a merger to create Stellantis in 2021, CEO Carlos Tavares has been on a cost-cutting mission. That’s beginning to pay dividends for the company and investors.How the trans-Atlantic automaker expects to keep that momentum amid uncertainty surrounding all-electric vehicles and increasing competition from Chinese automakers is expected to be in focus this week as Tavares leads the automaker’s investor day Thursday.Tavares and other executive are expected to address Chinese competition, capital discipline, forthcoming products, software initiatives, and potentially, further cost reductions as the company aims to achieve ambitious financial targets by 2030.When Tavares’ PSA Groupe merged with Fiat Chrysler in January 2021, the freshly combined company set out to reduce spending by 5 billion euros, or about $5.4 billion, annually. It’s a target the company says it will achieve in 2024, a year ahead of schedule.More recently, Tavares has said the parent of brands like Ram and Jeep needs to remove 40% of its costs to be able to profitably produce and sell EVs to mass-market consumers, citing the need for affordable models despite higher costs to manufacture the vehicles.”We are not in the race to transition to EVs, but in a race to cut cost on EVs,” Tavares said in late May during a Bernstein investor conference.The cuts are part of Stellantis’ strategic plan to increase profits and double revenue to 300 billion euros by 2030. The plan also includes targets such as achieving adjusted operating profit of more than 12% and industrial free cash flow of more than 20 billion euros.The cost-saving measures have included reshaping the company’s supply chain and operations as well as headcount reductions.Several Stellantis executives described the cuts to CNBC as difficult but effective. Others, who spoke on the condition of anonymity due to potential repercussions, described them as grueling to the point of excessiveness.Since the merger was agreed to in December 2019, Stellantis has reduced headcount by 15.5%, or roughly 47,500 employees, through 2023, according to public filings. Additional job cuts this year involving thousands of plant workers the U.S. and Italy have drawn the ire of unions in both countries.Meanwhile the associated billions in operational savings have helped to increase the automaker’s adjusted operating income by 31% from 2021 through last year. Its adjusted profit margin is also up, rising 0.4 percentage point during that time frame to 12.8%.Stellantis Chief Technology Officer Ned Curic said the company is operating far more efficiently than before, including “proper system engineering” to ensure it’s optimizing design and function for its new vehicles.Curic, who joined the company from Amazon in 2021, said headcount reductions, including laying off about 400 U.S. engineers in March, come after the company completed many of its systems for the next decade.”We’ve been cutting headcounts, but we really don’t need that many,” he said during an interview last month, adding the compa …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]
