WEBVTT - Stellantis CEO Carlos Tavares Talks Automakers Under Pressure

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Here's the latest this morning. Auto Earning's reflecting some big

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<v Speaker 2>challenges for the industry, with ford A Stellantis delivering disappointing results,

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<v Speaker 2>Stillantis opting to bring back old models and wearing price

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<v Speaker 2>cards after a massive drop in sales during the first

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<v Speaker 2>half of the year. Joining us now to discuss the

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<v Speaker 2>Stalantis CEO Carlos Stavaras. Carlos, great to catch up with you, sir,

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<v Speaker 2>difficult mourning for the stock. We're down about eight percent,

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<v Speaker 2>you know that. I want to talk about some of

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<v Speaker 2>the brands. I'm not sure how many people recognize or

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<v Speaker 2>realize how big this company is. So just give me

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<v Speaker 2>a couple of seconds to go through this. At the

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<v Speaker 2>premium end, you've got the luxury brand like Maserati. Then

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<v Speaker 2>you've got Alfa, Romeo Lancier. You've got Jeep, which of

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<v Speaker 2>course is well known here in the United States, Christ

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<v Speaker 2>the Dodge ramp over. In Europe, Citron, Fiat opal Pergo,

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<v Speaker 2>a buff which, of course Abbath is part of the

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<v Speaker 2>Fiat business. This goes on and on and on, and

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<v Speaker 2>I'm trying to work out this morning. Carlos Wather you're

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<v Speaker 2>committed to all of that that lineup those brands, or

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<v Speaker 2>whether some of them could become and spun off.

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<v Speaker 3>Oh there is.

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<v Speaker 4>First of all, you are right to say that the

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<v Speaker 4>automakers are under pressure. The auto industry is in a turmoil,

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<v Speaker 4>and as you are looking at the results, everybody is

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<v Speaker 4>going in the same direction. And for the time being,

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<v Speaker 4>as much as I am aware of, we are the

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<v Speaker 4>only guy in town with the double digit ay margin.

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<v Speaker 4>But you are right, we are under pressure. And to

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<v Speaker 4>your question about the brands, there is no taboo. There

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<v Speaker 4>is absolutely no taboo. The brands are intangible assets that

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<v Speaker 4>we respect. We believe that they are here to be leveraged.

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<v Speaker 4>We could celebrate this year the one hundred and twenty

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<v Speaker 4>fifth anniversary of Fiat and OPO, which demonstrates that the

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<v Speaker 4>brands are stronger than the legal entities, stronger than the

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<v Speaker 4>political regimes, and they can cross wars, survive and get better.

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<v Speaker 4>So we do respect the brands. We respect the fun

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<v Speaker 4>basis of the brands, but there is no taboo. If

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<v Speaker 4>they are not able to monetize the value that they represent,

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<v Speaker 4>then decisions will come. For the time being, all of

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<v Speaker 4>our brands with no exception, are profitable. It is not

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<v Speaker 4>by chance that we are a ten percent a Y

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<v Speaker 4>margin a car company the only want to be double.

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<v Speaker 3>Digit so far.

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<v Speaker 4>It is just because our brands are great, our products

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<v Speaker 4>are very appealing, and I will just use the example

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<v Speaker 4>of our Ram pickup trucks where we are again number

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<v Speaker 4>one in the gd Power Quality survey, which means that

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<v Speaker 4>our customers appreciate what our creative people are bringing to

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<v Speaker 4>the market. Now, it is true that the market is

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<v Speaker 4>in the turmoil. It is true that the transition that

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<v Speaker 4>we are going through is immensely challenging. And this is

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<v Speaker 4>a bump. There will be other bumps. This will last

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<v Speaker 4>for a few years. This is not a short term turmoil,

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<v Speaker 4>and the most resilient, the most focused, the most customer focused,

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<v Speaker 4>will survive, of course. And that also means, because that's

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<v Speaker 4>what I'm hearing, that cost reduction is not becoming a

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<v Speaker 4>tubway anymore. As you know, we have been working hard

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<v Speaker 4>on cost reduction for many years. We have not been

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<v Speaker 4>so popular, but now everybody recognizes that the customers want affordability,

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<v Speaker 4>The customers want a safe, clean and afford mobility. So

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<v Speaker 4>that's my comments to your great question.

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<v Speaker 1>Thank you, there's one question about cutting the cost of

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<v Speaker 1>the vehicle. There's another question about cutting costs internally to

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<v Speaker 1>offset some of the increased expenses. Shipmen's North America fell

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<v Speaker 1>eighteen percent in the last quarter, and I'm just wondering

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<v Speaker 1>whether some deeper cost cutting, to John's point, is required

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<v Speaker 1>to sort of bring that up to speed at a

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<v Speaker 1>time where the EV transition isn't spending as quickly as

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<v Speaker 1>people had planned.

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<v Speaker 4>For exactly and what you are saying, you say is

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<v Speaker 4>not happening as quickly as the people that planned for.

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<v Speaker 4>I would like, with all the respect to correct that

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<v Speaker 4>it is not happening as quickly as the political leadership

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<v Speaker 4>is expected.

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<v Speaker 3>What we are.

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<v Speaker 4>Seeing in the Western world right now is that the

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<v Speaker 4>consumers are not supporting as much as the political leadership

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<v Speaker 4>was expecting the EV rampop and the consumers they are

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<v Speaker 4>very clear in what they expect from us. They expect safe, clean,

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<v Speaker 4>and affordable mobility. And safe and clean they are affordable

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<v Speaker 4>is the challenge. So they want basically to buy EV

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<v Speaker 4>cars at the price of internal combustion engine cars. They

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<v Speaker 4>don't want to pay more for the EV technology, which

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<v Speaker 4>I can totally understand, and I want to tell them

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<v Speaker 4>that we are working super hard to achieve that, and

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<v Speaker 4>we already have evidence that we are succeeding because we

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<v Speaker 4>started to launch our first B segment EV cars from

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<v Speaker 4>twenty thousand euros a little bit more than twenty thousand dollars,

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<v Speaker 4>and we will bring to the US market in a

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<v Speaker 4>couple of years a Jeep model below twenty five thousand dollars.

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<v Speaker 4>So yes, we hear what they say, and we are

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<v Speaker 4>working super hard to deliver that. And indeed, the political

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<v Speaker 4>leadership through the regulations, thought that the consumers were able

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<v Speaker 4>and willing to pay a higher price for evs, and

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<v Speaker 4>they are telling us the consumers that they don't agree

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<v Speaker 4>with that. And we are in the middle. We are

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<v Speaker 4>the fuse between the consumers and the regulators. We are

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<v Speaker 4>trying to fix it, and of course it's difficult.

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<v Speaker 3>It's difficult.

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<v Speaker 5>In January, you said you were going to hold off

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<v Speaker 5>on some of your investments in the United States because

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<v Speaker 5>you wanted to see how the election played out. But

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<v Speaker 5>are you basically saying now it doesn't matter who gets

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<v Speaker 5>elected because the consumers are rejecting the government push towards

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<v Speaker 5>the EV models.

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<v Speaker 4>Well, that's not exactly what I am saying, it's a

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<v Speaker 4>little bit more complicated than that. What I'm saying is

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<v Speaker 4>that we have received loud and clear the message of

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<v Speaker 4>affordability that the consumer is asking us to deliver on evs.

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<v Speaker 4>The sooner we get there, the faster we are going

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<v Speaker 4>to ramp up. And the investments in the EV technology

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<v Speaker 4>are already done. What needs to be done now is

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<v Speaker 4>the investments in the capacity for the volumes. So the

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<v Speaker 4>investments in the capacity will be staged in function of

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<v Speaker 4>the adoption by the consumers. And the adoption by the

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<v Speaker 4>consumers is going to be function of our ability to

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<v Speaker 4>bring affordable vehicles to the market, which we are right

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<v Speaker 4>now doing. And I think it's going to have a

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<v Speaker 4>few bumps on the road. That's nothing specific or nothing surprising.

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<v Speaker 4>It is going to be a bumpy road, and we

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<v Speaker 4>will adapt the capacity investments to the adoption rate of

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<v Speaker 4>the consumers, which is going to be the consequence of affordability.

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<v Speaker 4>That's where we are, and we are bringing a lot

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<v Speaker 4>of proof points that we are achieving that starting with

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<v Speaker 4>European market right now, but it will come very soon

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<v Speaker 4>with your US, Carlos.

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<v Speaker 1>How difficult is it to compete right now with Chinese

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<v Speaker 1>auto manufacturers who really have a leg up in providing

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<v Speaker 1>affordable electric vehicles and are able to export some of

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<v Speaker 1>those to Europe. Right now, there are.

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<v Speaker 2>Gates in the US.

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<v Speaker 1>Are those gates positive or negative for you at a

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<v Speaker 1>time when you're a global car business?

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<v Speaker 3>Well that's a great question.

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<v Speaker 4>As we are a global car maker, and it was

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<v Speaker 4>pointed out that we had a fourteen plus one brand.

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<v Speaker 4>The plus one is a Chinese brand, Lick Motor. So yes,

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<v Speaker 4>we have fifteen brands and we are a global car maker.

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<v Speaker 4>As a racing team we are. We need to recognize

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<v Speaker 4>that being global means that we will not be protected everywhere.

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<v Speaker 4>For instance, we are not protected in Latin America, we

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<v Speaker 4>are not protected in Africa Middle East. So as a

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<v Speaker 4>racing team we are we need to confront ourselves with

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<v Speaker 4>the harshest competition. Right now, the harshest competition is China

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<v Speaker 4>and they have a thirty percent cost competitive edge against

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<v Speaker 4>US X workspaces and we are working hard to recover

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<v Speaker 4>those thirty percent cost competitive anticap that we have. And

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<v Speaker 4>it's good for a company like ours to be competing

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<v Speaker 4>with the harshest competition. That keeps us awake, that keeps

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<v Speaker 4>us alive, and we need to run fast and even

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<v Speaker 4>faster to compete. Then when we come to protected markets,

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<v Speaker 4>we have to realize that there are a lot of

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<v Speaker 4>side effects and collateral damages to protected markets and that

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<v Speaker 4>protection that may be nice in the short term may

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<v Speaker 4>have enormous disadvantages in the mid and long term. And

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<v Speaker 4>that's why we do not advocate custom duties. We have

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<v Speaker 4>to fight against the best. We have to make ourselves

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<v Speaker 4>better in quality, in appeal, in costs. This is the

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<v Speaker 4>way we can survive. And we used to say at

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<v Speaker 4>seventies the only thing that protects us is performance and

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<v Speaker 4>we deeply believe in that.

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<v Speaker 2>If that's the case, does that make it harder to

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<v Speaker 2>keep a production based in places like Italy?

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<v Speaker 4>It makes us harder in the Western world indeed. But

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<v Speaker 4>in the Western world we have more knowledge, more experience.

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<v Speaker 4>We should use our education, our scientific education, our capability

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<v Speaker 4>to work collectively to find padding breakers to compete.

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<v Speaker 3>It is possible.

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<v Speaker 4>The twenty three thousand euro mid trim EC three c

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<v Speaker 4>tuan is made in Europe, of course, in the lowest

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<v Speaker 4>cost countries of Europe.

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<v Speaker 3>But it's made in Europe. It's made inside of europe Act.

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<v Speaker 2>You know. The reason I ask is because there are

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<v Speaker 2>some Chinese producers looking for manufacturing base in Italy. You

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<v Speaker 2>of course have some production basis there. I wonder if

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<v Speaker 2>you'd be interested in selling them.

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<v Speaker 4>Well, it's a public information that all the European governments

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<v Speaker 4>are dating the Chinese carmakers to come to assemble their

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<v Speaker 4>vehicles in their countries. So all the European countries Italy, France, Germany, Spain,

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<v Speaker 4>they are all dating the Chinese.

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<v Speaker 3>Fine, So that's a fact.

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<v Speaker 4>So if you were to ask me, which is possibly

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<v Speaker 4>your question, would I would be willing to sell one

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<v Speaker 4>of my.

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<v Speaker 3>Plans to the Chinese?

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<v Speaker 4>I would ask you back a question, what is the

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<v Speaker 4>intention of the European Union if we are encouraged to

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<v Speaker 4>sell our plans to the Chinese? What will be the

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<v Speaker 4>sense and the purpose of inviting the automakers of Europe,

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<v Speaker 4>which represent fourteen million jobs, to end over their plans

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<v Speaker 4>to the Chinese? Does that make sense for the European citizen?

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<v Speaker 4>Of course it doesn't make any sense, which, of course

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<v Speaker 4>we know. So of course all businesses business will see

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<v Speaker 4>what the future will bring.

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<v Speaker 3>But we are here for the fight.

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<v Speaker 4>We are here to demonstrate that we have more appealing brands,

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<v Speaker 4>more exciting cars at the right level of affordability, with

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<v Speaker 4>the right performance and the right safety. So we are

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<v Speaker 4>going to fight. This is a competition. We love competition

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<v Speaker 4>and everything we do for Europe because the market is

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<v Speaker 4>much more open US market. Yeah, in terms of competitive

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<v Speaker 4>is of our technology will benefit our American brands because

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<v Speaker 4>Stanenttis is a global carmaker and the technology is available

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<v Speaker 4>for the fifteen brands of the company. Anything we do

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<v Speaker 4>to compete with the Chinese in Europe or in the

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<v Speaker 4>rest of the world will benefit, of course our US

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<v Speaker 4>brands to bring affordability and performance as soon as we

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<v Speaker 4>can to this market.

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<v Speaker 2>Colors, you've been super generous with your time. I just

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<v Speaker 2>want to return to my original question though, the way

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<v Speaker 2>you pose your response to that, the conversation that I

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<v Speaker 2>would have with a policy maker for the good of

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<v Speaker 2>the European economy and for the good of European labor,

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<v Speaker 2>it's a very different one to the CEO of an

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<v Speaker 2>order manufacturer. You, of course accountable to the shareholder and

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<v Speaker 2>the stock is down by nine percent as you know today,

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<v Speaker 2>this's a difficult day for Stilantis. So when I ask

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<v Speaker 2>you a question like, would you sell a production base

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<v Speaker 2>in Italy to the Chinese. I'm not asking you that

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<v Speaker 2>as a public official who needs to worry about the

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<v Speaker 2>size of the European labor market. I'm asking you that

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<v Speaker 2>as a seat yo, as the llansis. Is that a

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<v Speaker 2>good financial decision for you to make?

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<v Speaker 4>It depends if I am making profit out of that

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<v Speaker 4>facility or not.

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<v Speaker 2>When you're under capacity there on you.

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<v Speaker 4>I will make sure that we keep the capacity above

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<v Speaker 4>eighty percent each visiion rate. That's the threshold. As long

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<v Speaker 4>as you are above eighty percent, you can do a

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<v Speaker 4>good job, and.

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<v Speaker 2>Your confident you will be for the next twelve months

0:13:25.480 --> 0:13:25.920
<v Speaker 2>and beyond.

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<v Speaker 4>This is one of the things we have been discussing

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<v Speaker 4>with the Italian government. They keep on asking us to

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<v Speaker 4>have a one million car production, and I keep on

0:13:34.400 --> 0:13:39.040
<v Speaker 4>answering that I need one million customers. The point is

0:13:39.040 --> 0:13:41.280
<v Speaker 4>not about the production. The point is about the customers.

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<v Speaker 3>Now, it is.

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<v Speaker 4>Quite clear that if you have one million customers out

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<v Speaker 4>there and you have to break down the one million

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<v Speaker 4>customers among a certain number of car makers, If you

0:13:55.960 --> 0:13:58.800
<v Speaker 4>increase the number of carmakers competing for the same one

0:13:58.840 --> 0:14:02.600
<v Speaker 4>million customers. It is easy to understand that there will

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<v Speaker 4>be less cars to be produced, and that is going

0:14:05.320 --> 0:14:08.679
<v Speaker 4>to open the road to a new context. And in

0:14:08.720 --> 0:14:10.920
<v Speaker 4>the new context we'll see what other decisions we need

0:14:10.960 --> 0:14:13.040
<v Speaker 4>to make. But at the end of the day, it

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<v Speaker 4>all boils down to something we know very well in

0:14:15.360 --> 0:14:16.040
<v Speaker 4>the US.

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<v Speaker 3>Make the customer happy. Period.

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<v Speaker 4>It starts there good quality, good appeal, good affordability, and

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<v Speaker 4>then you will capture the share of the market that

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<v Speaker 4>you deserve. And if you don't compete with the harshest competition,

0:14:30.360 --> 0:14:32.880
<v Speaker 4>then forget it. On the long run, you are going

0:14:32.880 --> 0:14:35.680
<v Speaker 4>to disappear. There is no other way than to compete

0:14:35.680 --> 0:14:37.600
<v Speaker 4>with the harshest competition at any point in.

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<v Speaker 2>Time, Carlos, I can tell you this. I'd be very

0:14:39.400 --> 0:14:41.400
<v Speaker 2>happy if there was a mass AROUNDI on my drive. Okay,

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<v Speaker 2>we can leave it there, callus. Thank you, appreciate your time.

0:14:44.440 --> 0:14:46.960
<v Speaker 2>I can talk all day with you. Appreciate it. Calstavirusats

0:14:46.960 --> 0:14:47.600
<v Speaker 2>the scientist see