Automotive News Europe — 2024-12-01
Automotive Industry
Stellantis CEO Carlos Tavares stepped down from the automaker following a dispute with the board over how to fix weakening sales and a stock slump.
Tavares will hand over leadership of the automaker to an interim committee headed by Chairman John Elkann, the company said. A new CEO will be named in the first half of 2025.
“The company’s board of directors, under the Chairmanship of John Elkann, accepted Carlos Tavares’ resignation today from his role as Chief Executive Officer with immediate effect,” Stellantis said in the 1 December 2024 statement.
Stellantis said in October 2024 that it had begun a process to find a successor to Tavares, 66, who told reporters he would stay on until the end of his mandate in early 2026. Tavares is leaving sooner than expected because his views on the automaker’s future clashed with those of the board and some shareholders, Stellantis said.
Stellantis Senior Independent Director Henri de Castries said in the statement: “Stellantis’ success since its creation has been rooted in a perfect alignment between the reference shareholders, the board and the CEO. However, in recent weeks different views have emerged which have resulted in the board and the CEO coming to today’s decision.”
Stellantis confirmed its financial guidance for the year in its statement announcing Tavares’s resignation. Its shares are down 38% in the past 12 months.
Tensions between Tavares and Stellantis board
A source familiar with the matter told Reuters that tensions grew because the board felt Tavares was moving too quickly and focusing on near-term solutions to save his reputation rather than working in the best interest of the company.
The suddenness of the announcement underlined the severity of the fissures between the board and Tavares, given that the parties decided it was better to operate with no CEO on a short-term basis, Bernstein analysts said.
Previously regarded as one of the most respected executives in the auto industry, Tavares’ approach came under scrutiny after slumping sales in North America led the automaker in September to issue a profit warning on its 2024 results.
That included a forecast cash burn of up to €10 bn ($10.6 bn), mostly due to slow sales and bloated inventories in North America, the group’s profit powerhouse.
The profit warning triggered a wide reshuffle of the group’s top management, including changes of its chief financial officer and of its head of North American operations, but initially spared Tavares.
The automaker’s share continued to decline in key markets, fueling concerns over the automaker’s long-term prospects.
Sales of the automaker’s vehicles through the third-quarter of this year were down 17% in the US compared to the year-ago period, with significant losses across the Dodge, Ram, Jeep and Chrysler brands.
Stellantis has been struggling to sell even 2023 model-year cars, data provided to Reuters by car-shopping app CoPilot shows. There are 112 days of supply on dealer lots of Ram 1500 pickups and Jeep Wagoneers, CoPilot data shows, about 20 days higher than their respective rivals, the Chevrolet Silverado and Ford Expedition.
Tavares ‘will not be missed’ in North America
Jeff Laethem, who owns a Stellantis dealership in Detroit, said he was relieved at the news of Tavares’ resignation. The last year has been punishing for him as inventory has built up and sales of once-dependable vehicles dropped.
“It couldn’t get worse,” Laethem said, adding his nearby General Motors dealership has not faced the same challenges.
“He won’t be missed in North America,” said Erik Gordon, professor at the University of Michigan’s Ross School of Business. “Not by the suppliers he fought with. Not by the dealers he fought with. And not by car buyers who ignored his vehicles.”
Tavares had led Stellantis since its creation in early 2021 through the merger of Fiat Chrysler and Peugeot owner PSA. After rising through the ranks at Renault under cost-cutting champion Carlos Ghosn, Tavares long impressed investors with his ability to turn around ailing automakers when others failed.
He was on track to repeat that success early on as CEO of Stellantis, reducing the number of vehicle platforms and eliminating jobs. But tensions escalated this year when unions warned that the company’s cost-cutting course led to quality problems and delays in the rollout of key new models. In the US, dealers accused Tavares of damaging brands such as Jeep, Dodge, Ram and Chrysler.
His outspoken style has often put him in conflict with counterparts including US unions and the Italian government, which complained about his decisions to reduce auto production in Italy.
In America, the United Auto Workers union threatened a nationwide walkout, alleging Stellantis failed to keep the commitments it made in a contract finalized last year. Stellantis said it has complied with the labor agreement.
“Tavares is leaving behind a mess of painful layoffs and overpriced vehicles sitting on dealership lots,” UAW President Shawn Fain said in a statement.
Fabio Caldato, a portfolio manager at AcomeA SGR, which holds Stellantis shares, said “new ideas and fresh forces are needed to plan the company’s future".
Stellantis has 14 brands, and Tavares had warned underperformers within the portfolio were at risk of being axed.