Today’s News
Carlos Tavares, CEO of Stellantis (STLAM.MI), abruptly resigned on Sunday following a turbulent period for the automotive giant. The announcement comes just two months after the company issued a profit warning due to faltering sales in North America, which have led to a 40% drop in Stellantis’ market value this year.
The Stellantis board, including Chairman John Elkann, accepted Tavares’ resignation “with immediate effect.” The company stated that an interim executive committee, chaired by Elkann, will temporarily oversee operations. Stellantis plans to name a new CEO in the first half of 2025.
Image Source: The New Straits Times
Disagreements Behind the Exit
Henri de Castries, Stellantis’ Senior Independent Director, revealed that tensions had arisen between Tavares, the board, and major shareholders in recent weeks, ultimately leading to the CEO’s departure.
Once lauded as one of the auto industry’s most respected leaders, Tavares’ tenure faced increasing scrutiny after Stellantis’ September profit warning. The company forecasted a cash burn of up to EUR 10 billion (USD 10.6 billion) due to sluggish sales and inventory buildup in North America—a region historically responsible for much of its profits.
Challenges in North America
Stellantis’ profit warning led to a major management shakeup, including changes to its Chief Financial Officer and head of North American operations, though Tavares initially retained his role. The CEO later announced he would not seek a new term and planned to step down in early 2026.
Despite these efforts, the company’s struggles continued. U.S. sales through the third quarter of 2024 fell 17% year-over-year, with significant declines across key brands like Dodge, Ram, Jeep, and Chrysler. Dealers have voiced frustration, highlighting a growing inventory of unsold vehicles, including 2023 models.
Jeff Laethem, a Stellantis dealer in Detroit, expressed relief at Tavares’ resignation. “It couldn’t get worse,” he said, adding that his General Motors dealership had not faced similar issues.
Stakeholder Perspectives
John Elkann, representing Stellantis’ largest shareholder, EXOR (EXOR.AS), praised Tavares’ role in creating Stellantis through the merger of Fiat Chrysler and Peugeot PSA in 2021. However, analysts suggest the decision to operate without a CEO for now signals significant discord between Tavares and the board.
“New ideas and fresh forces are needed to plan the company’s future,” said Fabio Caldato, portfolio manager at AcomeA SGR, a Stellantis shareholder.
Labor and Production Challenges
Tavares often clashed with unions and governments during his tenure. The United Auto Workers union (UAW) accused Stellantis of failing to honor previous labor agreements, leading to the threat of a nationwide walkout. “Tavares is leaving behind a mess of painful layoffs and overpriced vehicles sitting on dealership lots,” UAW President Shawn Fain stated.
Meanwhile, the automaker faced criticism in Europe for scaling back production in Italy and struggling to address underperforming brands within its 14-brand portfolio.
Looking Ahead
As Stellantis seeks to stabilize operations, analysts believe the company must address inventory challenges and rekindle sales momentum, particularly in North America.
The search for Tavares’ successor will be closely watched, as Stellantis navigates a critical juncture in its journey as one of the world’s largest automakers.
(USD 1 = EUR 0.9455)
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