Carlos Tavares has resigned as CEO of Stellantis amid mounting pressures and differences with the board. His departure follows a revised profit forecast and significant revenue declines, exacerbated by challenges in the North American and Chinese markets. Interim CEO John Elkann will lead until a successor is appointed. While Tavares was known for his cost-cutting strategies, concerns over quality and brand identity have emerged. His exit has received mixed reactions from unions and industry leaders, highlighting ongoing instability within the company.
Carlos Tavares Resigns as CEO of Stellantis
Carlos Tavares has faced mounting pressure for several months, and the board of directors at Stellantis has finally acted. In a succinct press release on Sunday evening, the multinational automotive giant announced the immediate resignation of the 66-year-old Portuguese executive from his role as CEO.
The company attributed this decision to “different viewpoints” between Tavares and the board, without elaborating on the specifics. Stellantis plans to appoint a successor within the first half of 2025. In the meantime, John Elkann, who previously served as the chairman of Stellantis and Ferrari, will step in as interim CEO.
Challenges Faced by Stellantis
In September, Stellantis had already indicated that Tavares would step down at the end of his five-year contract, which concludes in early 2026. Along with his departure, several personnel changes at the upper management level were announced.
The company recently revised its profit forecast for the current year downwards, citing a “turbulent global environment.” Revenues for the third quarter dipped by more than 25% to 33 billion euros, according to their headquarters in Amsterdam. This decline is attributed to a combination of weak industry conditions and challenges in the North American market, where Stellantis typically earns substantial profits from large SUVs and pickups. Currently, there is an oversupply of unsold cars at dealerships in the U.S., leading to decreased sale prices.
Demand is also falling in other regions, exacerbating overcapacity issues. Like many automakers, Stellantis is grappling with an economic slowdown in China and a dwindling interest in electric vehicles across Europe. Adding to the uncertainty, potential disputes over car tariffs loom, particularly with the American political landscape shifting.
Despite being hailed as a transformative leader, Carlos Tavares has been unable to reverse Stellantis’ decline. After a long tenure at Renault, where he rose to prominence, he became CEO of the merged entity resulting from PSA’s collaboration with Fiat-Chrysler in 2021. Brands under the Stellantis umbrella include Opel, Alfa Romeo, Dodge, Maserati, and Lancia.
Tavares’s approach relied heavily on stringent cost-cutting measures, mass layoffs, and production adjustments to accommodate dwindling demand. His self-proclaimed title as a “performance psychopath” resonated with investors, as he managed to revitalize struggling manufacturers where others had failed.
However, tensions escalated recently, with unions warning that the austerity measures implemented by Tavares might lead to quality issues and delays in launching crucial new models. In the U.S., dealers expressed concerns that these strategies were damaging iconic brands like Jeep, Dodge, Ram, and Chrysler.
In an attempt to ease tensions, Tavares visited the Sochaux and Rennes sites in mid-November, assuring employees that no factories would close in the next three years. Yet, he acknowledged that he could not guarantee this in the current climate of the Western automotive industry. Reports indicate that sales of Stellantis vehicles in Paris have dropped by 13% since the year began.
In the U.S., reactions to Tavares’s departure have been lukewarm at best. Shawn Fain, president of the United Auto Workers, remarked that Tavares leaves behind “chaos from layoffs and overpriced vehicles on dealer lots.”
Interestingly, French union representatives reacted with surprising calmness to Tavares’s exit. A CFDT union member stated, “We knew he was on the hot seat, but we now need a more stable social environment to restore strong team cohesion and halt the talent drain,” as reported by “Le Monde.”
Stellantis has also encountered friction with the Italian government regarding production figures, leading to protests in Rome where thousands of employees demanded job security. Elkann personally briefed Italian Prime Minister Giorgia Meloni, who has long opposed the merger between Fiat-Chrysler and PSA, about Tavares’s resignation.
While the company has not disclosed the specifics of Tavares’s compensation package, it is reported that his annual salary was an astonishing 36.5 million euros, approximately 518 times the average salary within the company, as calculated by “Le Parisien.” Meanwhile, Stellantis’s stock has plummeted by nearly 40% since the start of the year.