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Stellantis ( STLA ) seeks to rebuild relations with dealers and

partners

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Rejoining ACEA signals more unified stance on EU carbon

targets

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Elkann's leadership reassures investors, shares rebound

over 18%

By Giulio Piovaccari and Nora Eckert

MILAN/DETROIT, Dec 16 (Reuters) - Steered by Chairman

John Elkann, Stellantis ( STLA ), owner of 14 brands including

Fiat, Jeep and Ram, is acting swiftly to dismantle the legacy of

its former CEO and repair relations with dealers, industry

partners, governments and workers.

Carlos Tavares abruptly resigned on Dec. 1, almost 18 months

before the expiry of his contract, as a rift widened between the

board and main shareholders of the world's fourth-largest

carmaker.

While it seeks a new CEO, Stellantis ( STLA ) is being run by an

interim executive committee, chaired by Elkann.

Having warned on profits at the end of September and facing

a bloated inventory, Stellantis ( STLA ) cannot afford to drift under its

temporary leadership.

Elkann, 48, is the scion of the Agnelli family that founded

Italian carmaker Fiat more than a century ago. He also chairs

Ferrari ( RACE ) and runs the Exor Agnelli family

holding.

The new approach will be tested on Tuesday, when the

automaker's representatives meet Italian Industry Minister

Adolfo Urso and local unions to try to agree a long-term plan

for production in Italy.

The company - the country's sole major automaker - may

pledge to expand output and protect jobs in return for improved

manufacturing conditions and government support for the

industry's electric transition, easing tensions with Rome.

A Stellantis ( STLA ) source, speaking on condition of anonymity,

said it was the right time to sign a deal.

REJOINING LOBBY GROUP

Less than a week after the CEO quit, Stellantis ( STLA ) said it

would rejoin European auto lobby group ACEA. It left at the

beginning of 2023 based on a decision by Tavares, who opted for

an independent lobbying strategy without consulting the board,

according to a second source.

The carmaker plans to align itself with the group's

proposals, Stellantis' ( STLA ) Europe Chief Jean-Philippe Imparato said

last week.

Tavares had opposed a call by ACEA for relief on

intermediate targets on the European Union's carbon reduction

targets under which carmakers risk multi-billion euro fines.

His position was not backed by associations of Stellantis

European dealers, who supported the ACEA proposal.

But in a meeting of Stellantis European retailers, held in

Amsterdam days after Tavares' resignation, Imparato was the main

guest and the mood was relaxed.

"The cooperation with Stellantis ( STLA ) ... is strong, and we

are confident that we can face future challenges with our

partner," the dealers said in a statement.

Alberto Di Tanno, the chairman of Italian dealership

group Intergea said it was too soon to see concrete changes but

that he was confident.

"It looks like the company wants to present itself as less

centralised, and give more autonomy to its country structures,

including in relations with the dealers," he said.

REPAIRING RELATIONS

Tavares, an industry veteran who had led Stellantis ( STLA ) since

its creation in 2021 through the merger of PSA and

Fiat-Chrysler, had been feted for increasing operating margins.

However, dealers on both sides of the Atlantic complained

that rising prices for its mass-market marques ultimately lost

it the support of inflation-hit customers.

Stellantis ( STLA ) this month swiftly re-hired retired executive

Timothy Kuniskis to lead Ram, one of its most important brands.

Industry analysts have interpreted the decision as a step to

improve relations with dealers in the U.S., the group's profit

powerhouse, and reverse Ram's U.S. sales, which were down 24%

this year as of the end of the third quarter.

Kevin Farrish, leader of Stellantis' ( STLA ) dealer council, said

Elkann met with their executive board in the U.S. in early

December to discuss how the automaker could repair its

relationship with the dealers.

Elkann said Antonio Filosa, appointed chief of North

American operations in October, would have the authority to

respond to market conditions, Farrish said.

"It meant a great deal to us," he said in a message. "We

have a ton of opportunities to fix what Mr. Tavares harmed."

Santosh Viswanathan, who owns a Stellantis ( STLA ) dealership in

Delaware, said Elkann's early actions were promising, though

there was a lot of work to do.

"The dealer body, which is your distribution channel, has

been left in tatters," Viswanathan said.

"Right now, drastic times require drastic measures."

ELKANN'S STEADYING INFLUENCE

After sinking to their lowest since July 2022 on Dec. 2,

following news of Tavares resignation, Stellantis ( STLA ) shares have

rebounded by over 18%, after having fallen more than 40% since

the beginning of the year.

Andrea Scauri, a Swiss-based fund manager at Lemanik,

who rebuilt a small Stellantis ( STLA ) stake last week, said the whole

automotive industry will benefit from a softer EU approach on

carbon emission rules, including on potential fines on 2025

intermediate targets.

"Tavares denied this was a problem," Scauri said.

"Acknowledging there can be risks and having more

constructive relations with politics, at a national and EU

level, should help Stellantis ( STLA )."

A third source, who like the others spoke on condition

of anonymity because they were not authorised to speak publicly

on the issues, said Elkann was devoting most of his time to

Stellantis ( STLA ).

The source also said Elkann had opted for an interim

executive team, rather than taking the interim-CEO position as

he had done when Ferrari ( RACE ) was left without a CEO in late 2020.

"His idea was to have a more collegial management during

this phase, with increased focus on top executives, their role

and their skills, compared to the previous one-man-only style

under Tavares," the source said.