Stellantis CEO Carlos Tavares Resigns Amid Slumping Sales, Interim Leadership Announced

Carlos Tavares, CEO of Stellantis, has stepped down after nearly four years at the helm of the global automaker, leaving amidst declining sales and increasing criticism.

Stellantis, known for brands like Jeep, Citroen, and Ram, announced Sunday that its board had accepted Tavares’ resignation, effective immediately.

The company confirmed that the search for a permanent CEO is “well underway.” In the interim, Stellantis will establish an executive committee led by chairman John Elkann.

Tavares, who had previously served as the head of PSA Peugeot, became Stellantis’ CEO in January 2021 after the merger between PSA and Fiat Chrysler Automobiles.

This merger created Stellantis, now the fourth-largest carmaker globally, with a portfolio including Dodge, Chrysler, Fiat, Peugeot, Maserati, and Opel.

Sales Slump and Leadership Criticism

Stellantis has struggled to maintain profitability amid rising competition and market shifts. In the third quarter, the company reported a 27% drop in net revenues, down to €33 billion from €45 billion in the same period the previous year.

Global vehicle shipments fell by 20%, with North America experiencing the steepest revenue decline, dropping 42% to €12.4 billion.

The automaker’s North American operations, once a primary profit driver, have been hit hard by high vehicle prices and limited affordable options, leaving many unsold cars on dealership lots.

The average price of Stellantis vehicles in the U.S. reached $58,000 in late 2023, pricing out many core customers of brands like Jeep, Ram, Dodge, and Chrysler.

The decline in sales led to layoffs and factory closures, including the elimination of shifts at plants in Michigan and Ohio. These measures, combined with delays in reopening facilities like the Belvidere, Illinois plant, drew sharp criticism from the United Auto Workers (UAW) union.

UAW President Shawn Fain welcomed Tavares’ resignation, calling it “a major step in the right direction for a company that has been mismanaged and a workforce that has been mistreated for too long.”

Fain also criticized the CEO for “reckless mismanagement” that led to layoffs and overpricing.

Union and Dealer Frustrations

The dissatisfaction with Tavares extended beyond the union. Kevin Farrish, chair of Stellantis’ U.S. dealers’ council, accused the CEO of prioritizing profit margins and executive pay over affordable pricing and market competitiveness.

Farrish cited plant closures and declining market share as examples of short-term decisions that negatively impacted the company’s long-term performance.

In 2023, Tavares earned €36.5 million in compensation, drawing widespread criticism. Farrish’s August letter highlighted the CEO’s “record profitability” for Stellantis in 2023 but condemned the fallout, including declining U.S. sales and rising customer dissatisfaction.

Interim Leadership and the Road Ahead

As Stellantis transitions leadership, the interim executive committee led by John Elkann will guide the company. Elkann thanked Tavares for his role in creating Stellantis and emphasized the board’s commitment to appointing a new CEO by mid-2025.

In October, Stellantis revised its 2024 profit forecast due to declining sales and earnings but maintained its adjusted outlook despite ongoing challenges.

UBS analysts noted that advancing the CEO transition process by six months could reduce uncertainty and potentially drive a turnaround in 2025.

The UAW continues to pressure Stellantis over contract compliance and job security, threatening further strikes. The company has denied breaching its agreements and plans to challenge any new strike actions.

Closing a Controversial Tenure

Carlos Tavares leaves Stellantis during a period of profound challenges for the automotive giant. While his tenure brought record profits in 2023, it also exposed systemic issues, from overpricing to strained labor relations.

Stellantis faces a crucial phase as it seeks new leadership to restore stability, address market demands, and strengthen relations with employees and stakeholders. Whether the company can rebound from its current struggles will depend on strategic shifts under its future CEO.

Shares of Stellantis fell over 8% following the announcement, signaling market uncertainty about the automaker’s direction in the wake of Tavares’ departure.