Stellantis CEO Carlos Tavares resigns amid ‘different views’ with board
Stellantis NV CEO Carlos Tavares resigned Sunday amid the automaker’s recent declining profits, sharply falling sales this year in the United States and mounting criticism from dealers and unions in recent months.
The maker of Dodge, Chrysler, Jeep, Ram, Fiat and many other brands said in the surprise afternoon announcement that the company’s board had accepted Tavares’ resignation, effective immediately. It marks a sudden fall for a renowned executive known for his cost-cutting, business savvy and engineering in the 2021 transatlantic merger that created Stellantis out of Fiat Chrysler Automobiles NV and French automaker Groupe PSA.
The Stellantis announcement added there had been diverging views recently between Tavares and the company’s board and that those differences “resulted in the board and the CEO coming to today’s decision,” according to a statement from Henri de Castries, Stellantis senior independent director. A Stellantis spokesperson did not provide additional information about what led up to the departure.
Stellantis NV CEO Carlos Tavares resigned Sunday amid the automaker’s recent declining profits, sharply falling sales this year in the United States and mounting criticism from dealers and unions in recent months.
The maker of Dodge, Chrysler, Jeep, Ram, Fiat and many other brands said in the surprise afternoon announcement that the company’s board had accepted Tavares’ resignation, effective immediately. It marks a sudden fall for a renowned executive known for his cost-cutting, business savvy and engineering in the 2021 transatlantic merger that created Stellantis out of Fiat Chrysler Automobiles NV and French automaker Groupe PSA.
The Stellantis announcement added there had been diverging views recently between Tavares and the company’s board and that those differences “resulted in the board and the CEO coming to today’s decision,” according to a statement from Henri de Castries, Stellantis senior independent director. A Stellantis spokesperson did not provide additional information about what led up to the departure.
A search process for a new CEO had already been underway – because Tavares, 66, was expected to retire once his contract expired in early 2026 – and the company pledged in the statement that it would finalize new leadership by the first half of next year.
Until then, the company said a new interim executive committee chaired by John Elkann, the company’s overall board chair, will guide the company. The carmaker confirmed its financial guidance for the year would remain unchanged. That includes adjusted operating income margins of 5.5% to 7%, which was lowered about two months ago from double digits.
Stellantis shares are down 40% in the last 12 months.
“Our thanks go to Carlos for his years of dedicated service and the role he has played in the creation of Stellantis, in addition to the previous turnarounds of PSA and Opel, setting us on the path to becoming a global leader in our industry,” Elkann said in a statement.
Pressure mounting
Pressure from several angles has been mounting on Tavares. After posting record net profits of $20 billion in 2023, nothing seemed to be going right this year. Through the first half of the year, profits plummeted by nearly half. In the United States, the company’s most lucrative region, the carmaker watched its sales tumble through the first three quarters.
Among the problems: vehicle prices that were too high, gaps in the product lineup, increasing frustration from labor, including the United Auto Workers, and deepening tension with U.S. dealers, who had watched their inventories balloon and their sales slump.
In early October – not long after the company issued a profit warning – Tavares and the board announced a large-scale executive shakeup that included a new chief financial officer and new leaders for North America and Europe. At the same time, the company confirmed that Tavares would retire once his term ended in 2026, an announcement that had followed news that a successor search was underway.
The UAW escalated its criticism of Tavares in recent months, accusing him of mismanaging the company and hammering his more than $39 million pay package. The union posted videos and even started a website in recent weeks calling for his firing. On Sunday, UAW President Shawn Fain said the CEO’s resignation was welcome news and a “major step in the right direction for a company that has been mismanaged and a workforce that has been mistreated for too long.”
“Tavares is leaving behind a mess of painful layoffs and overpriced vehicles sitting on dealership lots,” Fain added in a statement. “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.”
Stellantis’ U.S. dealer body also was not shy about criticizing the company and Tavares’ decisions as cars piled up on their lots this year, causing many to feel the financial squeeze due to falling sales. A September letter from the dealers to Tavares said that “reckless short-term decision-making” had led to record profits last year, followed by devastating results this year, including the “degradation” of some of the company’s best-known brands like Ram and Jeep. The leader of the automaker’s U.S. dealer council, Kevin Farrish, did not immediately provide comment on Tavares’ departure.
Timing a ‘shocker’
A native of Portugal and avid car racer, Tavares previously worked at Renault and was a pupil of the embattled former Renault-Nissan chairman and CEO Carlos Ghosn. Tavares became CEO of Groupe PSA in 2014 and quickly brought the struggling automaker to profitability ahead of schedule. As for the merger that created Stellantis, Tavares explained that such consolidation was needed to survive an industry being transformed on its way toward electric vehicles, a transition period the executive has often described as “Darwinian.”
Wedbush Securities analyst Dan Ives called Tavares’ resignation a “shocker” because he wasn’t supposed to retire for more than another year. But there had been growing pressure on Tavares from Wall Street and other sources, he noted.
“The fact that they ripped the band-aid off at this juncture, it’s another black-eye moment for what’s really been a disaster year for Stellantis,” Ives said. “This just shows that the board – they’d rather make this move quicker and try to turn this ship around.”
Ives said it’s unclear what comes now for the automaker: “They have to look at every model that’s coming out in terms of where they’re looking to invest, the EV strategy, the cost structure. Do all the assets make sense? I think all options are on the table.”
Stellantis’ board likely saw whatever plan Tavares had presented as insufficient to fix fast enough the issues the company faced with dealers, unions, suppliers and old product, said Carla Bailo, president of professional organization SAE International, who worked under Tavares at Nissan for almost eight years.
“Knowing Carlos, he’s not going along with that,” she said. “He did that at Renault: ‘I don’t agree. I’m gone.’ That’s just how his mode is.”
He proved his talent in turnarounds in the European market, but the United States is a different beast, and just trying to pinch every part of the company and its partners isn’t how business gets done in a global automaker, Bailo said.
“He likes to control everything,” she said. “And I think he didn’t have a strong bench.”
The company has experienced a lot of churn in executive roles leading regions, brands and departments, including the North American market and the key Jeep brand. “You learn a lot by working for him,” Bailo said, “but your career development or personal development is not his strength.”
The next several months and up to a year will be messy for Stellantis, Bailo added. The committee needs to work fast on finding a turnaround expert to address the strained relationships with its dealers and suppliers – some of whom the company sued – as well as the quality issues of its products. It needs to invest in updating the lineup, she added, which might entail taking on some debt and dealing with a lower profit margin.
Bailo suggested there are a few supplier CEOs or recently retired or resigned executives with the right experience to take on the challenge of the struggling automaker. She suggested bringing in a “fixer” initially before later finding a longer-term leader.
In North America, where revenue fell 42% in the third quarter and shipments were off 36%, it appears Stellantis has a “decent plan” for a turnaround, said Stephanie Brinley, principal automotive analyst at S&P Global Inc.
“It’s a matter of letting it play out,” she said. “They were making progress on adjusting pricing. They’re making progress on not just making things cheaper, but trying to come up with a way to repackage and develop products that are giving consumers the right value.”
Next year, Stellantis needs to move forward with the several products it’s launching – including high-profile EV offerings – and ensure those launches go as smoothly as possible, she said: “It’s going to be a big year for them, and they need to have it go as smoothly as possible, and that means being able to handle whatever unexpected issues come up as well as possible.”