Resignation of Carlos Tavares

In a stunning turn of events, Carlos Tavares, the CEO of Stellantis—home to iconic brands like Chrysler, Jeep, Fiat, and Peugeot—has resigned amidst internal strife and disappointing sales figures. The company announced this shocking decision on Sunday, indicating that Tavares' exit was precipitated by a “difference in views” with the board of directors, as well as mounting criticism over his leadership.

Stellantis' Declining Sales

This resignation follows a dismal period for Stellantis, marked by a troubling decline in vehicle sales. Reports indicate that the company has seen a staggering 20% drop in third-quarter sales, with a 10% decrease in global sales during the first half of 2023. In the United States, sales dwindled by 17% over the first three quarters, exacerbated by high prices that have alienated core customers. The average price of a Stellantis vehicle sold in the US hit a staggering $58,000 by late 2023—a figure that many analysts say is simply too steep for traditional buyers of brands like Jeep and Ram.

Internal Strife and Union Responses

Faced with a glut of unsold inventory and escalating tensions, including impending layoffs and dissatisfaction from the United Auto Workers (UAW) union, calls for Tavares' ouster had grown louder. Union leaders have long criticized his management style, labeling it as misaligned with the interests of the workforce and consumers alike.

"I welcome the resignation of Carlos Tavares," stated UAW representatives in a statement. "This is a pivotal step for Stellantis to rectify years of mismanagement and poor treatment of workers."

Criticism and Layoffs

Tavares, who played a critical role in the 2021 merger of PSA Group and Fiat-Chrysler to form Stellantis, has been under scrutiny for prioritizing profit margins at the expense of market competitiveness. In August, Kevin Farrish, head of Stellantis’ US dealers’ council, chastised Tavares in a public letter, underscoring that his short-term strategies had devastating long-term repercussions, including plant closures and shrinking market shares.

To add to the turmoil, Stellantis announced significant layoffs: around 1,200 workers were let go from the Warren, Michigan truck plant, and approximately 1,100 more at the Toledo Assembly Complex South, where the Jeep Gladiator is produced. The UAW warned of a potential strike if the company fails to adhere to labor agreements, asserting that Stellantis has not upheld its commitments since negotiations last year.

Compensation Controversy

Despite this turmoil, Tavares’ compensation has raised eyebrows, with his total earnings amounting to a whopping €36.5 million (approximately $36.8 million) in 2023 alone, making him the highest-paid automotive CEO. This stark contrast has fueled further ire from employees and stakeholders who argue that this financial windfall was unwarranted given the company's poor performance.

Looking Ahead

In response to Tavares' resignation, Stellantis has initiated the search for a new CEO, which is expected to be completed by mid-2025, with John Elkann, the chairman, set to head an interim executive committee. The situation continues to unfold as Stellantis attempts to navigate these challenging waters, facing not just internal pressures but a rapidly shifting automotive market hungry for innovation and competitive pricing.

As the automotive giant steers into uncertain waters without Tavares, the industry will be watching closely: Will Stellantis succeed in turning its fortunes around? Will new leadership herald a transformation in strategy that prioritizes workers and consumer needs? Stay tuned for updates!