- The resignation of Stellantis CEO Carlos Tavares creates uncertainty as the company grapples with declining sales and leadership challenges.
Stellantis NV Chief Executive Officer Carlos Tavares’s surprise departure leaves the maker of Jeep SUVs and Peugeot cars without clear leadership at a time of significant upheaval in the industry.
The shares fell as much as 8.9 per cent in Milan on Monday, and are down 46 per cent this year, after the company said late Sunday that Chairman John Elkann will head an interim committee that’s taking over from Tavares until a new CEO is found.
Stellantis is under pressure to halt a sales slide in the US and tackle overcapacities in Europe, where demand for electric cars is waning just as Chinese manufacturers expand in the region.
Tavares’s departure, reported earlier by Bloomberg News, means the group is without leadership when “critical decisions” need to be made, said Jefferies analysts led by Philippe Houchois.
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The CEO is leaving sooner than expected as his views on the carmaker’s future differed from those of the board and some shareholders, the company said. While Tavares had run Stellantis since it was formed in 2021 through a merger of PSA Group, parent of Peugeot and Citroën, and Fiat Chrysler, his drastic cost-cutting push in recent months sparked pushback from unions, dealers and managers inside the company.
Tavares is one of a number of industry executives who’ve come under pressure as carmakers confront a slumping market that’s struggling with an economic slowdown in China, flagging demand for EVs in Europe and the threat of tariffs as Donald Trump prepares to return to the White House House. Nissan Motor Co. Chief Financial Officer Stephen Ma is also set to step down, people with knowledge of the matter said over the weekend.
Tavares in recent weeks was trying to regain control after setbacks that led the automaker to slash expectations for full-year profit and cash flow in late September. While European rivals such as Volkswagen AG are also struggling with weak demand, the magnitude of Stellantis’s warning — caused by sliding sales, a dated US vehicle lineup and bloated inventory — alarmed investors.
Tavares pledged fixes and moved to replace his finance chief and other executives, but market share continued to decline in key markets including France, fueling concerns over the carmaker’s long-term prospects. The company on Sunday confirmed its guidance and said it plans to name a new CEO in the first half of next year.
Swapping out the CEO and CFO in such a short time creates a “challenge” for investors, said JPMorgan analyst Jose Asumendi, adding that investors are unlikely to price in significant earnings improvement for the next year until the management team is reset.
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After rising through the ranks at Renault SA under cost-cutting champion Carlos Ghosn, Tavares, 66, long impressed investors with his ability to turn around ailing automakers where others failed.
He was on track to repeat that success early on as CEO of Stellantis, reducing the number of vehicle platforms and eliminating jobs. Tensions escalated in the recent months, with unions warning that the company’s cost-cutting course was leading to quality problems and delays in the rollout of key new models. In the US, dealers accused Tavares of damaging brands such as Jeep, Dodge, Ram and Chrysler.
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“He won’t be missed in North America,” said Erik Gordon, professor at the University of Michigan’s Ross School of Business. “Not by the suppliers he fought with. Not by the dealers he fought with. And not by car buyers who ignored his vehicles.”
Chief Financial Officer Doug Ostermann, who was appointed in the wake of the September profit warning, on Oct. 31 cited “good progress” in reducing inventory and improving market share trends in the US, the company’s biggest single profit pool. Ostermann is scheduled to speak at a fireside chat at a Goldman Sachs autos conference later this week.
Stellantis has also clashed with Italy’s government over its production levels in the country. Elkann alerted Italian Prime Minister Giorgia Meloni prior to Tavares’s resignation, people familiar with the matter said.
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First Published Date: 06 Dec 2024, 09:36 AM IST
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