Tang Weishi talks about the Reform Process of Stellantis
Compile the | Yang Yuke
Edit | Shen Tianxiang
Produced by | Bangning Studio (gbngzs)
After 41 years in the automotive industry, Carlos Tavares, CEO of Stellantis, said without humility that he is now a wise man in the industry.
Years of knowledge and experience have given him the confidence to not only lead to the merger of PSA Group and FCA Group, but also to promote the phased success of the combined business, while making the entire company full of passion and vitality.
Tang Weishi said that the company, which has only been established for 1 year, has the ability to meet rapid change, enabling it to carry out comprehensive changes at the speed of a start-up. The effect of the reform is beginning to appear. In 2021, Stellantis' operating margin is comparable to that of high-end automakers and is expected to remain at double-digit levels.
In several roundtable discussions this month, Tang elaborated on the reform process in response to questions from Automotive News Europe and other journalists.
The following is the content of the interview, which is slightly edited by Bangning Studio.
Stellantis' "Dare Forward 2030" strategic plan sets a number of daunting goals, including doubling revenue to €300 billion by 2030, with adjusted operating margins remaining above 10% during this period and peaking at 12% in 2030. What makes you so confident that you can achieve such high goals in an increasingly challenging environment?
"Dare Forward 2030" is actually a bottom-up plan. That is to say, the plan develops from the bottom of the organizational structure and works up the layers until it reaches the top management.
I've asked the team many times, "Are you sure you can do it?" And they said, "Yes." Because they all want to change, don't want to be stuck in a traditional company like a dinosaur (old-fashioned), our employees are rapidly embracing change.
Some of our stakeholders, such as government personnel, may be surprised at how quickly we decide things. By dealing with many startups and tech companies, I can say that while there are still a lot of people who see us as part of the old ways, Stellantis makes decisions as fast as those startups and tech companies.
You said stellantis reduced the break-even point of production below 50% late last year. How did you do it? What was the break-even point earlier?
Stellantis began operations in January 2021, when its break-even point was around 4 million vehicles per year. In the summer of the same year, the chip supply situation was so bad that I realized that there was too much uncertainty and confusion around us, and we needed to constantly think about how to protect the company from these unexpected situations.
Last September, I took this issue with me to communicate with the company's top leadership team and decided to reduce the break-even to less than 50%, or about 3 million vehicles. By the end of the year, we had completed the work.
I visited about 30 factories last year. I found that our plant managers and their teams had a lot of ideas. The key is to create an environment where they can express their ideas and we can execute their ideas on the production floor. Through this effort, we have addressed fixed costs and variable costs. The synergies achieved in the first year after the merger were remarkably effective.
When Stellantis was founded, you set the annual synergy value of €5 billion ($5.5 billion) for five years and 80 percent, or 4 billion euros, by the fourth year. In 2021, the first year of combined operations, stellantis synergies were worth €3.2 billion. How did you achieve such a high goal so quickly?
We're on a good schedule, but what's even happier is that these synergies are bottom-up and raised by employees because they understand the purpose of the merger. And we're doing very meticulous things at a very fast pace.
Indeed, the synergy of 3.2 billion euros last year was easily realized. It is reasonable to think that when the initial results are achieved, the pace of progress will slow down. Nevertheless, we still plan to achieve the target of 5 billion euros by 2024, one year ahead of the original plan.
In the "Dare Forward 2030" plan, you plan to create a separate business unit for the Light Commercial Vehicles division. How will it fit into Stellantis' matrix of brands and regions?
Light commercial vehicles will become a global independent organization. I want all light commercial vehicle businesses to unleash tremendous potential to create a new business unit that operates independently from marketing, sales to manufacturing. After merging the light commercial vehicle business with the Pickup Truck business in North America, the company will sell approximately 1.2 million units per year. We hope to be the number one seller by 2030, launching 26 new models and doubling revenue from 2021.
Stellantis hopes to reduce distribution costs by 40% by switching to a hybrid retail model. In May 2021, Stellantis terminated all licensed dealer contracts in Europe and plans to launch the new model next year in specific brands and countries, but dealers are nervous. In view of this, what measures are being taken to soothe their fears?
Currently, we are in a dialogue with our dealers. I see from the minutes of the meeting that the discussions were cooperative, constructive and peaceful. Of course, there are always those who find it difficult to do so.
My response was, "Yes, the automotive industry itself is extremely challenging, which is why we are trying to work with dealers to build a distribution model that will be more effective for the future of both sides." However, we can never forget that the customer is at the center of this work, because Stellantis is a customer-centric company.
Italian politicians and unions have spoken out about Italy buying a stake in Stellantis to protect the country's factories and workers and balance France's 6 percent stake in the company. Does that make sense?
At the moment I do not see such an intention. But I believe there are plenty of other sensible ways to use taxpayer money. We ourselves can protect the Italian factory and work with the workers there because our company is creating a lot of value. If Italian citizens are willing to invest (to Stellantis), we are certainly happy.
By the way, Italy has a lot of potential for development, where there are a lot of dynamic talents. They also want to do more things that they haven't done in the past just because they don't have enough money. In view of the (financial) results we have achieved, more funds will be made available to relaunch Lancia, relaunch Alfa Romeo and bring new models to the Fiat brand.
Stellantis has promised not to close its plants, but sales in the European market are currently declining. Will your manufacturing base in Europe survive?
The size of the european market is the real problem, not only for Stellantis, but for the industry as a whole. Sales of passenger cars and light commercial vehicles in Europe fell from 18 million units in 2019 to around 15 million units in 2020 and 2021. Our market share is about 22%, which means we lose more than 600,000 vehicles a year.
In 2022, we do not expect a major rebound, with a growth rate of about 3%. As you can see through the Dare Forward 2030 plan, we have enough products, talent, distribution network and investment strength to maintain a market share of about 22%.
What is the ideal size of the European market?
Between 18 million and 20 million. If we continue to maintain around 15 million vehicles, we need to take action (to cut) production capacity, because I have to ensure the sustainability of the company.
Fiat Chrysler successfully spun off Ferrari in 2015. The Volkswagen Group has the same idea for Porsche. Will Stellantis consider stripping Maserati?
Anything is possible. It's just that at the moment we won't make such a choice. The reason is that in the next 10 years, Maserati's profit path is very clear, and the operating profit margin will be as high as 15% to 20%.
We have also done a lot of work in product planning and the demands on Maserati quality are very high. I've postponed the release of the Grecale (Compact SUV) to make sure it's absolutely where it should be in terms of matching and process, electronics and infotainment.
We are currently preparing to launch the new Gran Turismo (coupe) in 2023. So, I feel good about Maserati and so do I about Alfa Romeo. So I don't think any of our brands are going to be listed separately at the moment.
The German automotive industry is pushing the European Union to consider synthetic fuels as an alternative fuel to help reduce CO2 emissions. What do you think about that?
Synthetic fuels could be a good solution to low carbon, as long as it protects the planet and also provides an affordable alternative energy source for the middle class.
There are concerns that the electrification transition will cost automakers and suppliers thousands of jobs. What do you think?
From the point of view of manufacturing itself, building an electric car is not much different from building a fuel vehicle. It's just a matter of training. The main difference is assembling that big box — the battery pack — which is a big part of the car's cost.
As long as you produce battery packs and batteries near the car assembly line, that is, in the same area, it is not a big problem. My main concern is the attitude that I see the most in Europe, that change is seen as a threat.
We should not be afraid of change. Change doesn't have to be painful. Change can also be fun, and we should have fun from it. I always tell my employees, "Please go ahead and take risks." "I'll take care of the aftermath. In this team of four or five well-educated, well-intentioned, open-minded executives, there has never been an unsolvable problem.
(Part of this article is comprehensively reported by Automotive News, and some of the pictures are from the Internet)