David Booth: The wounds plaguing the auto industry are self-inflicted

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Troubles hurt the most when they prove self-inflicted

—Sophocles

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Stellantis just fired its CEO. Okay, officially — and, for the record, we too will parrot the formal explanation — Carlos Tavares resigned on December 1. On the other hand, let’s just say his resignation would seem to have been encouraged a bit more than most.

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A plethora of reasons have been posited for his departure, just one of them being that Mr. Tavares had what might be politely called an abrasive character. Dismissive of suppliers and underlings alike, the former Renault-Nissan executive — he studied hubris under former CEO Carlos Ghosn — seems to have alienated pretty much everyone, from chairman of the board John Elkann to the smallest of dealers.

His failure to produce the forecast USD$25 billion in synergies promised by the union of Fiat-Chrysler and the PSA Group also weighed heavy on his dismiss—er, resignation. Ditto what Automotive News Europe called his “‘irrational’ view of EV quotas.”  

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That said, by far his worst sin was ignoring the American marketplace. Stellantis may now be a multinational corporation — headquartered in the Netherlands and chaired by the scion of Italy’s Agnelli family — but whither the profit-spewing Ram and Jeep brands go, so do Stellantis’ fortunes.

And, as of late, they have not been doing well. Terrible, in fact, dealers plagued by a massive over-supply of vehicles and a curious lack of incentives to clear the backlog. And herein likes Tavares’ fatal mistake. The fact that COVID-19 ushered in an unexpected boom in profit margins is indisputable. Thanks to supply shortages and a consumer flush with cash from reduced pandemic spending, dealers were recording record profitability. Equally obvious — at least, one would have thought it were equally obvious — is that the removal of pandemic restrictions and all that government largesse would cause some form of contraction.

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Except that as it turns out, Stellantis was still pumping out cars and trucks with wild abandon. Until recently, the company was still trying to clear out 2023 models. Depending on who you talk to, management has known about this over-supply problem for at least a year, possibly two. And yet little corrective action was taken. Stellantis’ malaise — and Tavares’ resignation — would very much seem an own-goal problem.

Nissan’s woes — massive layoffs, faltering production, and global sales down 40% over the last seven years — are likewise largely self-inflicted. The most significant of its miscues is the absence of hybrids in its North American dealerships as consumers rush to “self-propelled electrics” instead of EVs. But, while others have fast-tracked new hybrids to market, Nissan says its e-Powered hybrid vehicles won’t hit our shores until 2026.  

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What makes this unforced error all the more egregious is that Nissan hybrids are available — not to mention successful! — in both Japan and Europe. And, unlike virtually all other automakers which either copy Toyota hybrid technology or simply license it, the company’s e-Power technology is unique and, in at least few regards, superior to the technology offered here.

Most hybrids sold in North America are parallel hybrids — that is, both the gas engine and the electric motor drive the wheels — while Nissan’s e-Powers are series hybrids. That means only its 210-horsepower electric motor drives the wheels, the little 1.5-litre gas engine serving as a generator. More Chevrolet Volt than Toyota Prius, then, only without the nuisance — and cost! — of a plug-in.

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Having spent a week in an X-Trail e-Power e-4orce in Italy this past summer, I can attest to the quality of Nissan’s unique hybridization, its highway performance and comportment especially noteworthy. At the very least, as the only automaker offering an alternative to Toyota-inspired series hybrids, the company’s range of e-Powered vehicles would have a branding advantage in a segment otherwise populated by copy-cats. Not having e-Powers already on the ground in the world’s second-largest marketplace is an unforced error, one that, if corrected, might have mitigated, if not outright solved, Nissan’s current woes.

Nor is Nissan the only automaker to ill-time the marketplace. Ford, General Motors, Audi, Mercedes-Benz, BMW, and even Volvo had all had to walk back their all-EV promises. Not only does this totally screw up top-level management decisions — which legacy plants to close, how many battery manufacturing facilities to open, and the exit of dealers unwilling to take on an all-EV future — but it virtually ended ongoing upgrades to their existing internal-combustion engines.

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Stellantis management knew about this over-supply problem for at least a year, and yet little corrective action was taken—Stellantis’ malaise, and Tavares’ resignation, would very much seem an own-goal problem

For larger companies still committed to some form of piston-powered future — General Motors and Ford, for instance, with their reliance on pickups — restarting their ICE/hybrid plans probably won’t be an onerous problem.  

For an only recently revitalized Volvo, however, I suspect it will probably prove more troublesome. The 2.0-litre four-banger that powers all gas and hybrid Volvos first saw the light of day in 2013, and development actually started way back in 2006. In other words, it is already, depending on your point of view, some 11 or 18 years old, and would have been either 17 or 24 years old if indeed the powerplant had been discontinued in 2030 as had been planned.

If they must now last to 2035 — and even that date for decommissioning must be at least somewhat suspect — Volvo’s ICEs will be positively Mesozoic compared to those who have continued to develop their ICE powertrains.

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In other words, Volvo would now seem to have a choice between revamping an ancient engine it thought it would no longer need; or designing an all-new powertrain it probably can’t afford. Protest all you like that internal-combustion is a sin against climate, but a state-of-the-art powertrain will be a damned sight cleaner than one that came off the drafting board when gas-powered Hummers were still a thing.

Hindsight is, of course, 20/20, and second-guessing decisions past neither fair nor accurate. For instance, more than a few automakers have been caught offside by president-elect Donald Trump’s call for universal tariffs across the Canadian and Mexican border, a calamity almost impossible to have predicted since, as Motor Mouth recently pointed out, the USMCA agreement Trump’s about to violate is of his own crafting.

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That said, many of these recent conundrums are well and truly self-inflicted. How could Stellantis delude itself that the gold rush that was the pandemic would sail on forever? What possessed Nissan to hold back its hybrids when it had an existing lineup of electrified sport-cutes and a voracious appetite for them? And what made so many automakers believe the rush to electrification could be accomplished world-wide by 2030, a complete rejigging of the entire world of automobile manufacturing in less than 10 years? There were warnings galore that neither they nor consumers were ready. Certainly, Motor Mouth preached caution on all three subjects. How could they screw up things so badly? 

That, unfortunately, is a Motor Mouth for another time!

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