Once one of the most respected executives in the auto industry, CEO Carlos Tavares is coming under withering fire from investors, dealers and employees as the company’s fortunes fade – especially in North America, its most profitable region. With his contract set to expire early next year, the automaker is considering whether it’s time for a management shake-up.
Stellantis CEO Carlos Tavares in July said there were “no taboos” about potentially axing under-performing brands.
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.
After years of growth, demand has tanked for both the Jeep and Ram brands, traditionally the most profitable in a global portfolio of 14 separate marques. And, despite a series of shake-ups in senior management, there are few signs that a turnaround is in the offing.
If anything, with investors, dealers and employees all openly expressing their frustrations, observers have begun wondering whether another round of management changes could follow. And Stellantis CEO Carlos Tavares is the man in the crosshairs.
Tavares contract set to expire
At 66, Tavares is at an age when most European CEOs retire. But he’s shown no interest in stepping down, at least so far. But he may have to convince the Stellantis board to keep him around.
The UAW is threatening to strike Stellantis, alleging it violated clauses in its new contract.
His contract is due to expire in early 2026 and the automaker’s chairman, John Elkann, recently confirmed to Bloomberg that the automaker has started a search for a possible successor to Tavares.
While that is “normal procedure” at this point, “There us growing pressure” to consider replacing Tavares, said Stephanie Brinley, principal auto analyst with S&P Global Mobility.
From hero to zero?
Tavares was long seen as one of the best and brightest in the auto industry – Ford CEO Jim Farley once listing the Portugese-born executive as the most capable of his direct competitors. He polished his reputation during a lengthy tenure at Renault, at one point seen as the heir-apparent to former Renault-Nissan-Mitsubishi Alliance chief Carlos Ghosn.
Tavares acknowledged his own “arrogance” has caused some of the company’s problems.
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.
But the picture isn’t the same today as it was three years ago. Even as Detroit rivals Ford and General Motors have posted gains in both sales and earnings, the bottom has fallen out at Stellantis, and Ram and Jeep carry much of the blame.
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What’s gone wrong
In today’s truck-centric market, one might expect those two brands to be soaring. But, critics contend, Stellantis has made a series of bad moves. Jeep and Ram haven’t received the sort of financial backing they need, goes the argument – which translates into gaps in their product portfolio and missed opportunities.
Jeep, for example, failed to keep the Cherokee model competitive and pulled it from production. Ram, meanwhile, still hasn’t added a midsize pickup to compete with the likes of the Toyota Tacoma, Ford Ranger and Chevrolet Colorado.
Earlier this month, in an unusual move, U.S. Stellantis dealers expressed their frustration with corporate management, accusing Tavares of making “disastrous choices” responsible for declining sales. The letter issued by a dealer advisory group was leaked to the public, the automaker responded angrily, upset by having such dirty laundry aired out.
More headaches
There are plenty of other problems. Investors have grown frustrated by the automaker’s weak performance in the stock market.
Salaried workers are concerned by recent job cuts and signs that more could follow, inside sources reporting that Tavares will move many operations from the U.S. – primarily in Michigan – to Europe.
Then there’s the United Auto Workers Union which plans to hold a strike vote in the coming days. The union accuses the automaker of violating a number of agreements contained in the contract signed last autumn after a lengthy strike. Among other things, Stellantis appears to be delaying plans for a midsized pickup and it isn’t moving, as expected, to reopen a shuttered plant in Belvedere, Illinois.
Can Tavares survive
For his part, Tavares has acknowledged making some critical mistakes, blaming his own “arrogance” for some of the Jeep and Ram problems.
Analyst Brinley said that despite the pressure in North America, it’s far from certain Tavares will be either pushed out, or choose to retire.
Other observers agree – for now. He’s made many bold moves before that have paid off. And if upcoming products start to generate traction at Ram and Jeep he could survive the current problems.
But should the company continue to post weak profits and fail to rebuild sales and market share the CEO may have no choice but to fade into retirement.
Stop cutting at Corperate. Stop putting so much into battery operated . Slow your roll like GM and Toyota . Clean up your toxic work environment at Corporate Chrysler as your reputation is atrocious. Many of us won’t by from you because you have turned into a bunch of thugs.
Ford should grab him and give him Lincoln — do or die (both him and the brand).
He’s not the problem. The Chrysler brand has been dead for 10 years but no one wanted to put it to sleep. So they just kept bleeding money. You can’t run a business based on emotions. This company has taken billions of govt money over the decades to keep it afloat. They need to downsize the brands and build efficient vehicles people want to buy
Their engines last about 100,000 miles then have to be rebuilt the transmisions are garbage I know her daughter that has 2003 Challenger still on the lot
He can’t leave soon enough! Corporate greed at its finest!! No loyalty to America or to the American auto workers!! Good riddens!!!