CEO Tavares’s Resignation Could Leave Struggling Stellantis Rudderless

With CEO Carlos Tavares resigning “with immediate effect,” and no successor in sight, Stellantis could face even more trouble trying to resolve the problems that saw its sales, earnings — and stock price tumble so far this year. The lack of a chief executive officer also comes at a time when the Euro-American automaker is set to launch an assortment of critical new products, including the first all-electric Jeep and Ram models aimed at the U.S. market.

Carlos Tavares is out. But, for the moment, there’s no one coming in to fill his place as chief executive officer of the world’s fourth-largest automaker. And, for Stellantis, that could add to some already serious problems.

Officially based out of the Netherlands, the Euro-American automaker has suffered a string of serious financial setback this year — reversing what had seemed like a solid march against rivals like Volkswagen, Toyota, Hyundai Motor Group and General Motors during the first three years after it was formed. As sales and earnings have dipped, Stellantis shares have gone into a tailspin, losing about 40% of their value since the start of 2024.

Steps Tavares and his team have put in place over the last several months have shown some signs of progress, but his departure — following what appears to have been a confrontational weekend meeting with the Stellantis board — suggest there was clear disagreement over what to do next.

What went wrong?

The once-promising merger of Fiat Chrysler Automobiles and France’s Groupe PSA hasn’t been going as planned. Net profits at Stellantis were off by nearly 50% for the first half of this year, largely due to a slump in North American sales. In September Stellantis lowered its full-year guidance, net revenue subsequently falling 27% year-over-year for the third quarter.

Much of the downturn centers around North America and, in particular, the two most profitable Stellantis brands: Jeep and Ram. Overall U.S. demand was down 20% for the third quarter, the most recent period for which Stellantis has reported sales.

A variety of factors caught blame, including delayed product launches, aggressive pricing that failed to consider growing consumer resistance, and increasingly bloated inventories. In June, Tavares blamed his own “arrogance” for his making three key mistakes: failing to respond to a major increase in dealer inventories, ignoring manufacturing issues, and lacking “sophistication in the way (Stellantis goes) to market.”

“Different views have emerged

“Stellantis’ success since its creation has been rooted in a perfect alignment between the reference shareholders, the Board and the CEO,” Senior Independent Director, Henri de Castries said in the statement. “However, in recent weeks different views have emerged which have resulted in the Board and the CEO coming to today’s decision.”

Exactly how those views clashed is unclear, but friction between Tavares and the board, including Chairman John Elkann, reportedly has increased in recent months. That led to the decision that the 66-year-old Tavares would retire when his current contract expires in 2026.

Why he’s stepping down now hasn’t been revealed. But several sources point to various issues that could have led to the move. In recent months, Stellantis has slashed prices, even while adding hefty incentives, on key models, such as the Jeep Grand Wagoneer SUV and Ram 1500 pickup. It also has moved to trim production in a bid to reduce those bloated inventories — cutting dealer stock by about 50,000 vehicles, or 11.6%, during the third quarter.

The carmaker did see an improvement in demand for some products, Jeep up 4% for the quarter, Ram gaining 3%. But that came at a cost — hitting margins and resulting in substantial layoffs across the U.S. In turn, that has exacerbated already strained relations with the United Auto Workers Union which is threatening to strike over a variety of concerns. That includes an indefinite delay in reopening the now-shuttered Belvedere (Illinois) Assembly Plant.

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“Distractions” ahead

Despite some positive signs, the steps Tavares has taken so far have yet to dig the automaker out of its hole. The question now is whether it can make any additional moves without someone at the helm. In the five-paragraph statement issued by the automaker it noted there is no successor ready to take Tavares’ place. In fact, a new CEO is not expected to be named until sometime “in the first half of 2025.”

Elkann said he will be “working with our new Interim Executive Committee” in an effort to both find a new chief executive and keep Stellantis pointed in the right direction. “Together,” he added, “we will ensure the continued deployment of the Company’s strategy in the long-term interests of Stellantis and all of its stakeholders.”

But the apparently unplanned shake-up very well “could cause distractions in day-to-day operations,” said Stephanie Brinley, principal auto analyst with S&P Global Mobility. There are a variety of reasons why:

• For one thing, a number of Stellantis veterans have either quit, retired or been forced out in recent months, including former Jeep boss Jim Morrison and Dodge chief Tim Kuniskis;
• Antonio Filosa, who only came to the U.S. as Morrison’s replacement last winter was promoted to chief operating officer of North America in October, a role where he was expected to serve as Tavares’ point man; and
• Tavares’ initial plan to keep all of the brands — 14 in all — from FCA and PSA, then signaling he’s open to getting rid of several brands under the Stellantis umbrella

A big year ahead

Meanwhile, 2025 “is going to be a big year, for the North American market in particular,” said Brinley, noting “There will be a lot of high-profile launches.”

These include the delayed debut of the Dodge Charger Daytona, the Jeep Wagoneer S and the Ram 1500 REV, the carmaker’s first all-electric models targeting the U.S. They will roll into showrooms at a time when EV sales growth has rapidly decelerated — and as a new administration enters the White House, incoming President Donald Trump’s team signaling it is likely to roll back EV mandates and eliminate the tax credits that have helped boost demand.

There will be other new gas-powered models, as well. And, across the board, whoever does come to the helm at Stellantis will have to work to reduce inventories, boost demand, address manufacturing issues, rebuild margins and fix relations with the UAW. And those are just the most critical challenges in the U.S.

The automaker has plenty of challenges in other parts of the world, notably in China where increasingly aggressive domestic brands have been hammering foreign-owned manufacturers.

Tavares’s unexpected downfall

What brought Carlos Tavares down is a subject likely to long be debated. It wasn’t all that long ago that he was being hailed as a hero, even Ford CEO Jim Farley at one point describing the Portugese-born Tavares as the best chief executive in the business.

He polished his reputation during a lengthy tenure at Renault, at one point being touted as the heir-apparent to former Renault-Nissan-Mitsubishi Alliance chief Carlos Ghosn. The two man had a falling out in 2013 and Tavares soon moved to Groupe PSA, the Paris-based parent of brands including Peugeot and Citroen. After years of failing fortunes, Tavares engineered a rapid turnaround. And he garnered even more respect when PSA acquired General Motors’ money-losing Opel/Vauxhall subsidiary, putting it into the block in barely a year.

Now 66, Tavares took an even bolder gamble with the 2021 merger that became Stellantis. It created one of the world’s largest automotive manufacturers, with a significant footprint in virtually every major market. It also boasted the industry’s largest portfolio of brands, including the likes of Fiat, Maserati, Citroen and Renault in Europe, as well as Ram and Jeep in North America. The latter two were printing money at the time the merger was completed.

A merger on the rocks

Initially, things seemed to be going in precisely the right direction, Tavares appearing to deliver on the $9 billion in savings generated by the merger. But insiders began to complain that the focus on budget-cutting was excessive, especially in the U.S., where sharp reductions were made in product development, marketing and other operations. That was particularly visible at the carmaker’s U.S. headquarters in Auburn Hills, Michigan which today has the feeling of a ghost town.

Tavares in July called such complaints “wrong,” and, during an earnings call, suggested his critics were seeking a “scapegoat.”

Indeed, even though Wall Street has grown increasingly nervous about Stellantis, some observers told Headlight.News on background that they think Tavares was laying out the right recovery plan – suggesting 2025 could have shown solid results.

At this point, he won’t be around to claim credit — or blame. The question is what happens now as Stellantis goes searching for a new leader with no one immediately ready to take the helm.