Stellantis Starts Search For New CEO After Sales, Profits Plummet

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Good morning! It’s Tuesday, September 24, 2024, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.

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1st Gear: Stellantis To Replace Carlos Tavares As CEO

After struggling sales, falling profits, outcry from dealers and a call to sell off its historic brands, enough may finally be enough for Stellantis. Now, the Jeep and Fiat owner appears to have decided that change is needed to turn the automaker around and is beginning its search for a new CEO.

Carlos Tavares has been in the role since Stellantis was formed by a merger between the PSA Group and Fiat Chrysler Automobiles. However, struggles faced by the company across North America has its bosses concerned and a search has now begun for Tavares’ replacement, reports Automotive News. As the site explains:

Stellantis Chairman John Elkann has started a search for a successor to CEO Carlos Tavares, whose contract runs out in early 2026. The automaker confirmed the decision in response to questions from Bloomberg News, adding that it’s part of regular succession planning.

Pressure on Tavares is rising due to Stellantis’ poor performance in markets including the U.S., its biggest single profit pool. Elkann has no plans for an immediate leadership change and Tavares will be included in the search process, according to people familiar with the matter.

Elkann, who himself is facing questions over tax irregularities in Italy, has reportedly become “increasingly dissatisfied with the situation in North America,” reports Automotive News. Across the U.S., sales for the automaker have stagnated in recent months and dealers have repeatedly aired their concerns about the automaker’s aging lineup across its brands.

Those struggles have been blamed on Tavares’ cost-cutting efforts, which have swept Stellantis over the past year, as well as weakening demand for the company’s electric models and increased competition from Chinese automakers.

As a result, sales for Stellantis’ American brands, like Jeep and Ram, were down through the first half of this year. This has hit the company’s stock, which has also slumped by more than a third so far in 2024. Maybe a change at the top can turn around these fortunes?

2nd Gear: White House Proposes Ban On All Chinese Car Parts

An influx of Chinese cars may be getting the blame for Stellantis’ current form, but that’s not the only accusation being levied at China’s electric vehicle dominance. Cars from China have also repeatedly faced accusations that they could be a risk to “national security,” and now the U.S. government has outlined its plan to do…something.

Lawmakers in the U.S. have proposed a ban on all Chinese vehicle parts being imported into the country so that our cars “can’t be used against us,” reports NPR. The move would restrict imports of hardware and software that support driverless systems or connect vehicles to the world, including systems like Bluetooth and GPS. As NPR reports:

“We’ve already seen ample evidence of [China] pre-positioning malware on a critical infrastructure for the purpose of disruption and sabotage,” Jake Sullivan, the national security adviser, said on a call with reporters. “And with potentially millions of vehicles on the road, each with 10- to 15-year life spans, the risk of disruption and sabotage increases dramatically.”

Earlier this year, FBI Director Christopher Wray warned Congress that China was targeting American water treatment plants, pipelines and power grids.

Beyond national security, Sullivan said the ban would give U.S. drivers added personal security. With cars collecting geolocation, audio and video data — Chinese and Russian software and hardware can’t be trusted, Sullivan said.

The move has been branded a step to “secure our cars” and “secure the American people” if it comes into effect. Before that happens, the measures are open for public comment with lawmakers eyeing an introduction ahead of the 2027 model years.

As it stands, Chinese-made cars aren’t big sellers here in the U.S. In 2023, 104,000 Chinese-made cars were sold across the country, which accounted for less than one percent of all new cars sold here last year. Cars do contain a lot of Chinese parts though.

3rd Gear: $1 Billion Fund Launched To Help Suppliers Shift To Electric

While working to clamp down on Chinese EVs with one hand, the U.S. government is looking to support American-made electric cars with the other. As such, lawmakers have unveiled a new billion-dollar-scheme to encourage smaller auto producers and suppliers to get on the electric hype train.

The White House has selected investment firm Monroe Capital to back a $1 billion initiative offering loans to smaller auto suppliers, reports Reuters. The Drive Forward Fund LP will be backed by low-cost government-guaranteed lending, as Reuters explains:

The White House said the fund would “facilitate access to lower cost capital for small- and medium-sized auto manufacturers to refinance, grow, and diversify their businesses” and noted that more than 250,000 people across the United States work for small- and medium-sized auto suppliers.

“We believe this new Drive Forward Fund will be critical to catalyzing growth and innovation within America’s automotive supply chain,” Monroe CEO Ted Koenig said.

Chicago-based Monroe said unlike larger manufacturers, small- and medium-sized auto suppliers often lack access to finances, hindering their ability to expand to produce parts for EVs.

Loans issued as part of the fund will support small auto businesses across the country to modernize and kick start their transition to electric power. The launch of the loans follows a similar program announced by vice president Kamala Harris earlier this year, which pledged more than $100 million for small- and medium-sized auto parts manufacturers to expand or retool.

4th Gear: Toyota Forklifts At Center Of America’s New Emission Scandal

There’s another emissions scandal sweeping the nation hot on the heels of the discovery that shops across the U.S. were selling cheat devices to diesel owners. Now, it’s not a mom and pop shop trying to fix the system, it’s Toyota failing emission testing on its forklifts.

The Japanese automaker is facing a class action lawsuit that alleges that it cheated emission tests for nine of its forklift truck engines, reports Reuters. The suit was filed in San Francisco federal court and alleges that the world’s largest producer of forklifts fixed emission tests on some models. As the site reports:

It came after an internal Toyota probe found in January that the company sometimes made software changes or substituted different engines in emissions tests, enabling forklifts to perform better there than in the real world.

Toyota suspended some forklift sales in Japan in March 2023 because of emissions issues.

But the plaintiffs said its misconduct first surfaced after an inquiry from the U.S. Environmental Protection Agency, though U.S. regulators have not brought any enforcement action. “Toyota has tried to limit the damage to Japan,” but its “toxic culture of fraud, negligence, and noncompliance” undermined forklift engine certifications in all markets, including the United States, the complaint said.

Toyota has so far not commented on the case, which was filed by Broadmoor Lumber & Plywood, Marders and Ferraro Foods. The three companies are a San Francisco landscaping company, a New York nursery and a New Jersey-based food distributor.

The case is the latest emission scandal to hit America after General Motors was fined more than $140 million because its models failed U.S. emission testing. It also follows a probe in Japan investigating irregularities with emissions from Toyota’s Land Cruiser model.

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