Written by / Zhang Ou
Editor/ Zhang Linyu
Design / Shi Yuchao
Source/Automotive News By LUCA CIFERRI
In February 2022, the Avengers Alliance Stellantis Group, which brings together 15 well-known brands, handed over its first-year report card: in 2021, all divisions achieved profitability, and the group's annual net revenue of 152.1 billion euros far exceeded expectations.
Carlos Tavares, CEO of the global automotive group, said he has been in the automotive industry for 41 years and that the experience he has accumulated over the years is his wisdom base for leading The efficient change of Stellantis, which also tells him the importance of "empowering and dynamizing all employees".
Embracing change is an ability. Tang Weishi believes that as a restructuring startup, Stellantis only has such a capability to quickly carry out comprehensive changes and achieve impressive initial results.
The Portuguese businessman further elaborated on Stellantis' goals and actions during several roundtable discussions in March.
Big stride
On March 1, 2022, Stellantis released its Dare Forward 2030 strategic plan. The main objectives include doubling revenue to €300 billion over nine years, maintaining an adjusted operating margin of more than 10% during this period and peaking at 12% in 2030.
In an increasingly challenging environment, it is a bit too bold to set these seemingly elusive goals.
Tang Weishi said that this is a bottom-up plan that began at the grassroots level of the group. He also asked his team several times: "Are you sure you can do it?" The answer was yes. Because employees don't want to stay in old companies like living fossils, everyone wants to change and is trying to meet change.
Some of Stellantis' stakeholders, namely the government, are sometimes amazed at how quickly the group issues decisions. In the eyes of many, the new entity merging the two traditional groups must be another inefficient old-fashioned enterprise, but larger. Stellantis certainly disagrees with this comment: "We've been dealing with a lot of startups and tech companies, and we're making decisions at the same pace as they are. ”
When Stellantis started operations in January 2021, its break-even point was around 4 million units per year. In the summer of 2021, as the supply of semiconductors gets worse and worse, the industry as a whole is wary of the many uncertainties that exist around it, forcing them to think about how to protect companies from or minimize the effects of these chaos.
In September 2021, Stellantis decided to work to reduce the break-even point to 3 million units, and by the end of the same year, the company achieved this goal.
At the beginning of its inception in 2021, Stellantis aims to achieve synergy effects worth 5 billion euros in five years (2025), of which 80% (i.e. 4 billion euros) will be achieved in the fourth year. However, 2021 is the first year of the company's operations, and the value of synergies has already reached 3.2 billion euros.
So Stellantis advanced its original plan by a year – to reach a target of 5 billion euros by 2024.
Tang Weishi attributed such achievements to the excellent pace of development of the entire group. In particular, it was noted that these synergies were also bottom-up, coming from the suggestions made by the employees, who fully understood the purpose of the merger. Everyone in the Group is doing every job at a very efficient pace.
Admittedly, the 3.2 billion euros generated last year are "low fruits" and an easy target to achieve. Therefore, he is also very rational in thinking that after these fruits disappear, the speed of development will slow down.
Throughout 2021, Tang Weishi implemented the duties of CEO and personally visited 30 Stellantis factories. Many plant managers and their teams have all kinds of ideas and suggestions. As an entrepreneur, Tang Weishi hopes to create an open environment for employees to express their ideas and put feasible and effective ideas into action.
In this way, the 1-year-old global group solves fixed costs and variable costs. The synergies of the group merger also helped tremendously.
* Fixed cost: refers to the total cost within a certain period of time and within a certain range of business volume, which can be maintained unchanged without being affected by the increase or decrease of business volume.
* Variable costs: Corresponding to fixed costs, it refers to the cost paid to various variable factors of production.
*Synergy Effect: Refers to the effect of "one plus one is greater than two". For example, after the merger and acquisition, the competitiveness is enhanced, and the net cash flow exceeds the sum of the expected cash flows of the two companies, resulting in complementary deficiencies and synergies between the two swords.
Department structure changes?
In its Strategic Plan for Dare Forward 2030, Stellantis said it would create a single, globally separate business unit for light commercial vehicles (LCVs). All LCV services can unleash great potential. As a brand new business unit, it will work independently from marketing and sales to manufacturing.
The light commercial vehicle business will form a business portfolio with approximately 1.2 million units per year, together with the Group's North American pickup business. Stellantis' ultimate goal is to become the number one car company to sell by 2030, launching 26 new models and doubling revenue from 2021.
In order to gather capital, group spin-offs are becoming popular in the automotive industry. Fiat Chrysler successfully spun off Ferrari in 2015, and the Volkswagen Group is reportedly planning a separate Porsche IPO. As the same luxury car brand, Maserati, which is currently under the umbrella of Stellantis, has also attracted a lot of speculation.
Tang Weishi replied: "Nothing is eternal, but not now. ”
Over the next 10 years, Stellantis has paved a very clear path for Maserati, doing a lot of work in product planning and working to get the well-known brand to continue to achieve profitable growth, reaching an operating margin of 15% to 20%.
In line with the identity, the brand sets very, very high standards in terms of quality, striving for excellence. To ensure the level it deserves in terms of assembly and decoration, electronics and infotainment, the Maserati Grecale compact SUV will also be delayed. At the same time, the new Gran Turismo, which is expected to launch in 2023, is also actively preparing.
Neither Maserati nor Alpha Romeo has any intention of a separate IPO, at least in the short term.
2023 Maserati Grecale
Manufacturing and distribution innovation
Some media have suggested that the shift to electrification will cost automakers and supplier workers thousands of jobs. But in fact, many car companies are retraining workers.
Tang Weishi said that from the perspective of manufacturing, there is no big difference between manufacturing electric vehicles and building models that make internal combustion engines, whether it is making fuel vehicles or electric vehicles, it is always people doing it. This also highlights the importance of learning and retraining. "As long as you're still living in the same area, it's not a big deal."
"In the entire automotive industry, it is everyone, whether at the top or the workers, who are facing change, who should not be afraid of change," he said. Change doesn't have to be painful, it can be fun, even if it's risky, and sometimes it can lead to unexpected gains. ”
Politicians and workers' unions in Italy sometimes float the idea of Italy buying stakes in Stellantis to protect the country's factories and workers. In Tang Weishi's view, this is a completely meaningless thing.
"I believe there are other, more sensible ways to use taxpayer money," he said. We can protect Italy and work with the workers there, because the company will continue to create a lot of value. If Italian citizens want to invest in Stellantis, we will also be happy. ”
Stellantis will also provide more funding to restart Italian brands Lancia and Alfa Romeo and bring new vehicles to Fiat.
There is also a big trend in the current automotive industry - direct sales, automakers face customers.
Stellantis also expects to reduce distribution costs by 40% by switching to a hybrid retail model. In May 2021, it had already terminated all of its franchised dealer contracts in Europe and planned to run new models across selected brands and countries, which also caused trepidation among dealers.
The relevant personnel of the Group are currently engaged in dialogue with the dealer agencies, and the overall progress is peaceful and constructive, of course, there will be difficulties to deal with.
Tang Weishi believes that the automotive industry is inherently challenging, and in such a critical period, manufacturers should work together with dealers to establish a new distribution model and form better initiatives for both parties in the future.
Asked about the progress of the negotiations, he said: "A group of well-educated, open-minded top managers, about 4-5 people, will not have problems that cannot be solved. Most importantly, the customer is at the center of this work, because at the end of the day, Stellantis is a customer-centric company. "It also hints at the imperative to reduce distribution."
A Stellantis dealership in Leicester City
Overall sales of passenger cars and light commercial vehicles in Europe fell from 18 million units before the pandemic in 2019 to about 15 million units in 2020 and 2021. Among them, in the past 2021, Stellantis accounted for about 22% of the market share, selling 3081590 units.
Tang Weishi does not expect a major rebound in the market this year, with an increase of about 3%. At the same time, he has enough confidence in the group to stabilize this 22% market share through existing products, talents, distribution networks and investment strength.
As for the entire European car sales market, he feels that the ideal size is between 18 million and 20 million units. If it continues to remain around 15 million units, it may be necessary to take action to reduce production capacity, otherwise the company's sustainability cannot be guaranteed.
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