Carlos Tavares Resigns

In a shocking move, Carlos Tavares, the Chief Executive Officer of Stellantis, has resigned effective immediately, just two months after the company issued a significant profit warning. This announcement comes as the automotive giant, known for brands like Jeep, Fiat, and Peugeot, has seen its stock plummet by approximately 40% this year.

Search for a New CEO

Stellantis confirmed the search for a new CEO will commence in the first half of 2025. Henri de Castries, the Senior Independent Director, remarked that Tavares’s departure was driven by escalating differences among major shareholders, the board, and Tavares himself in recent weeks.

Challenges Faced by Tavares

Previously celebrated as a stalwart in the auto industry, Tavares faced growing scrutiny after the company warned of a potential cash burn up to €10 billion ($10.6 billion) for 2024, primarily attributed to sluggish sales and excess inventory—especially in the critical North American market, which has been a major profit driver for the company.

Stock Performance Comparison

This dire forecast led to significant management changes, including a new chief financial officer and a leader for North American operations, but Tavares’s position remained secure until now. However, the situation worsened as Stellantis indicated Tavares would not seek an extension for his term beyond early 2026.

The automotive market is in flux, with Stellantis shares losing nearly 40% of their value in contrast to General Motors, which has fared far better with a 55% increase in shares this year. Ford Motor Company has seen a more modest 7% decline.

Remarks from Leadership

In a statement, John Elkann, the Chairman and heir of the Agnelli family—which founded Fiat and holds significant shares in Stellantis—thanked Tavares for his role in establishing the company as the world’s fourth-largest car manufacturer by sales.

Governance Complexity

The French government, through public investment bank BPI France, and the Peugeot family are also significant shareholders, adding layers of complexity to the business's governance.

Plans for Leadership Transition

Stellantis plans to expedite the appointment of a new CEO, with an interim executive committee under Elkann to be established in the meantime. Interestingly, the process was initially thought to be wrapped up by late 2024.

Reactions from Dealers

For dealers like Jeff Laethem in Detroit, the news of Tavares’s resignation brings a sigh of relief. Many have voiced frustration over stagnant inventory levels and reduced sales across key brands, with a staggering 17% drop in vehicle sales during the third quarter compared to the previous year.

Inventory Challenges

Despite possessing a diverse 14-brand portfolio, Stellantis has faced challenges in moving vehicles off dealer lots. Current inventory numbers are alarming, with 112 days of supply for key models like the Ram 1500 pickup and Jeep Wagoneer, significantly exceeding competitors such as the Chevrolet Silverado and Ford Expedition.

Speculations on New Leadership

Market analysts are speculating that the next CEO could be an American, as pressure mounts on Stellantis’s leadership to rejuvenate the brand and reverse its declining share values. Tavares, who played a pivotal role in the 2021 merger of Fiat Chrysler and Peugeot, has been known for his blunt speaking style—often inciting conflicts with labor unions and government representatives.

Labor Union Reactions

The United Auto Workers union has been particularly vocal about dissatisfaction, suggesting that Tavares will leave behind a legacy of layoffs and vehicles that remain unsold on dealership lots. UAW President Shawn Fain expressed hope for new leadership that is committed to the workforce and ready to fulfill the promises made to American workers.

The Future of Stellantis

As Stellantis navigates this period of upheaval, the automotive world watches closely to see what direction the company will take next. The stakes are high, and the clock is ticking for Stellantis to reclaim its footing in an increasingly competitive landscape.