Respected figure: Tavares during a visit to a Stellantis factory in Italy, earlier this year. He had been expected to stay on at the company until early 2026. — Reuters
DETROIT: Stellantis chief executive Carlos Tavares resigned abruptly last Sunday, two months after a profit warning at the maker of Jeep, Fiat and Peugeot cars that has lost around 40% of its value this year.
The company said it would seek to find a replacement chief executive officer in the first half of 2025.
Senior independent director Henri de Castries said in a statement the decision for Tavares to leave resulted from different views emerging in recent weeks among major shareholders, the board and Tavares.
Previously regarded as one of the most respected executives in the auto industry, Tavares came under criticism after Stellantis issued a profit warning on its 2024 results.
That included a forecast for a cash burn of up to 10bil or about US$10.6bil, mostly due to slow sales and bloating inventories in its North American market, the group’s profit powerhouse.
The 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.
After that, however, Stellantis said Tavares was not seeking a new term and would retire at the end of his current mandate, in early 2026.
Stellantis shares have lost around 40% of their value this year, while shares of US rival Ford Motor are down 7% this year and General Motors up 55%.
Interim leadership
“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 a statement.
Elkann, the scion of the Agnelli family which founded Fiat and is the top Stellantis shareholder through its investment company Exor, thanked Tavares for his role in the creation of Stellantis, the world’s fourth-largest carmaker by sales.
Other big shareholders include the Peugeot family and the French government, through public investment bank BPI France.
Stellantis said the process to appoint the new permanent chief executive was well under way and would accelerate to conclude within the first half of 2025.
In the meantime, a new interim executive committee, chaired by Elkann, would be established.
The process to select a new chief executive was initially set to be completed by the final quarter of next year.
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 GM dealership has not faced the same challenges.
Stellantis dealers have become more vocal with their displeasure in the last few months, sending a letter outlining their concerns to Tavares in September.
Sales of the automaker’s vehicles through the third-quarter of this year were down 17% in the United States compared to the year-ago period, with significant losses across the Dodge, Ram, Jeep and Chrysler brands.
The automaker 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 pickup trucks and Jeep Wagoneers, CoPilot data shows, about 20 days higher than their respective rivals, the Chevrolet Silverado and Ford Expedition.
New ideas and fresh forces
Fabio Caldato, a portfolio manager at AcomeA SGR, which holds Stellantis shares, said he expected Tavares would not finish his term.
“There is too much pressure on Stellantis’ management and new ideas and fresh forces are needed to plan the company’s future,” he said, adding he would not be surprised if the automaker appoints an American chief executive to turn around the company’s slumping shares.
Tavares has led Stellantis since its creation in early 2021 through the merger of Fiat Chrysler and Peugeot owner PSA.
The company has 14 brands, and Tavares warned under-performers among the portfolio were at risk of being axed.
His outspoken style has often seen 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 (UAW) union threatened a nationwide walkout, alleging Stellantis failed to keep the commitments it made in a contract finalised last year.
Stellantis said it has complied with the labour agreement.
“Tavares is leaving behind a mess of painful layoffs and overpriced vehicles sitting on dealership lots. We look forward to new Stellantis leadership that respects hardworking UAW members and is ready to keep its promise to America by investing in the people who build its products,” UAW president Shawn Fain said in a statement. — Reuters
