Carlos Tavares, CEO of Stellantis NV, said the decision was made after the automaker’s recent profit decline, a sharp drop in U.S. sales this year, and mounting criticism from dealers and labor unions in recent months. He resigned on Sunday.
In a surprise afternoon announcement, the maker of Dodge, Chrysler, Jeep, Ram, Fiat and many other brands said its board of directors had accepted Tavares’ resignation, effective immediately. This is the sudden departure of a prominent executive known for cost-cutting, business savvy and engineering in the 2021 transatlantic merger that created Stellantis from Fiat Chrysler Automobiles NV and French automaker Groupe PSA. It means falling.
Stellantis’ senior independent director, Henri de Castries, said in a statement that there had been recent disagreements between Mr. Tavares and the company’s board of directors, and that those differences had led to “the board and the CEO’s decision today. “This resulted in a decision being made,” he added. A spokesperson for Stellantis did not provide additional information about what led to his departure.
The process to find a new CEO was already underway — Tavares, 66, was expected to step down when his contract expires in early 2026 — and the company said in a statement that it would finalize a new CEO by the first half of next year. I promised to make a decision.
Until then, a new interim executive committee, chaired by John Elkann, chairman at large, will guide the company, the company said. The automaker confirmed that its financial outlook for this year remains unchanged. That includes an adjusted operating margin of 5.5% to 7%, down from double digits about two months ago.
Stellantis stock has fallen 40% in the past 12 months.
“We would like to thank Carlos for his many years of dedicated service and the role he played in the creation of Stellantis, in addition to the previous turnaround of PSA and Opel, leading us on the path to becoming a world leader in our industry. ” Elkann said in a statement.
Crimp
Tavares is under pressure from various angles. After hitting a record high of $20 billion in net income in 2023, nothing seemed to go right this year. Through the first half of this year, profits plummeted by nearly half. In the United States, the company’s most profitable region, the automaker saw sales slump through the first three quarters.
Among the problems were too high vehicle prices, gaps in the product lineup, growing dissatisfaction from workers, including from the United Auto Workers union, and severe tensions with U.S. dealers who were observing bloated inventories and sluggish sales. For example,
In early October, not long after the company issued its profit warning, Mr. Tavares and the board announced a major management shakeup, including a new chief financial officer and new leaders for North America and Europe. At the same time, the company confirmed that Mr. Tavares will retire at the end of his term in 2026, following news that a search for his replacement is underway.
The UAW has escalated its criticism of Tavares in recent months, accusing him of mismanaging the company and wiping out more than $39 million in compensation. In recent weeks, the union has posted a video and launched a website calling for his firing. On Sunday, UAW President Sean Fein said the CEO’s resignation was welcome news and “a step in the right direction for a company that has been mismanaged and for workers who have been mistreated for far too long.” “It’s a big step,” he said.
“Mr. Tavares has committed massive and painful layoffs and left overpriced cars abandoned on dealership lots,” Fein added in a statement. “We look forward to new leadership at Stellantis that values our hardworking UAW members and stands ready to honor our promise to America by investing in the people who make our products.”
Stellantis’ U.S. dealer group also hasn’t been shy about criticizing the company and Mr. Tavares’ decision, as cars have piled up on the lot this year and many are feeling the financial strain of falling sales. A September letter from dealers to Mr. Tavares said “reckless short-term decisions” led to record profits last year, but this year the company’s “reckless short-term decisions” led to a decline in some of the company’s best-known brands, including Rum. The company continued to experience disastrous performance, including “deterioration.” And a jeep. Kevin Farish, leader of the automaker’s American Dealers Council, did not immediately comment on Tavares’ resignation.
Timing the “Shocker”
Tavares, a Portuguese-born avid car racer, previously worked at Renault and was a student of embattled former Renault-Nissan chairman and CEO Carlos Ghosn. Mr. Tavares became CEO of Groupe PSA in 2014 and brought the struggling automaker back to profitability ahead of schedule. Tavares said the merger that created Stellantis was necessary to survive an industry undergoing a transformation toward electric vehicles, a period of transition that the executive often describes as “Darwinian.”
Wedbush Securities analyst Dan Ives called Tavares’ resignation “shocking.” That’s because he wasn’t planning on retiring for more than a year. But he noted that pressure had been mounting on Mr. Tavares from Wall Street and other sources.
“The fact that they pulled the band-aid off at this time is another sore point in what has been a really disastrous year for Stellantis,” Ives said. “This just shows that the board would rather move faster and turn this ship around.”
Ives said it’s unclear what the future holds for automakers. “They need to look at every model that comes out in terms of where they’re investing, their EV strategy, their cost structure.” Do all the assets make sense? I think all options are on the table. ”
Stellantis’ board likely deemed any plan presented by Mr. Tavares insufficient to quickly resolve the problems the company was facing with its dealers, unions, suppliers, and outdated products. said Carla Bailo, president of the professional organization SAE International, who worked under Mr. Tavares for almost a year at Nissan. 8 years.
“Knowing Carlos, he wouldn’t agree to that,” she said. “He said at Renault: ‘I don’t agree. I’m gone.’ That’s his mode.”
He has proven his mettle in turning around the European market, but the U.S. is a different beast, and trying to trip up every part of the company and its partners won’t do business for a global automaker, Bailo said. said.
“He likes to control everything,” she said. “And I don’t think he had a strong bench.”
The company has experienced a number of changes in executive roles leading regions, brands and divisions, including the North American market and major Jeep brands. “You learn a lot by working for him,” Bairo said. “But career development and personal growth are not his strengths.”
Bailo added that the coming months and up to a year will be difficult for Stellantis. The commission needs to move quickly to find remanufacturing experts to address not only product quality issues, but also strained relationships with dealers and suppliers, some of whom the company has sued. He added that the company needs to invest in revamping its lineup, which may require taking on some debt and dealing with lower profit margins.
Bailo suggested there are several supplier CEOs or recently retired executives with the right experience to take on the troubled automaker’s challenges. She suggested bringing in a “fixer” first before finding a long-term leader later.
Stephanie Brinley, principal auto analyst at S&P Global, said Stellantis had a “decent plan” to turn around in North America, where sales fell 42% and shipments fell 36% in the third quarter. He said it seems like there is.
“It’s about leaving it at that,” she said. “They were making progress in adjusting prices. They were trying to figure out how to not just make products cheaper, but to repackage and develop products that offered the right value to consumers.”
Next year, Stellantis needs to move forward with several product launches, including its hot EV products, and make sure those launches go as smoothly as possible, she said. “This is going to be a big year for them and they need to make it go as smoothly as possible, and that means being able to deal with any unexpected issues as best as possible if they arise.” ”
