Stellantis CEO Carlos Tavares Resigns Amid Sales Decline and Layoffs

Stellantis CEO

Stellantis CEO Carlos Tavares Resigns Amid Leadership Disputes and Sales Decline

Stellantis, the global automaker behind iconic brands such as Chrysler, Jeep, Fiat, and Peugeot, announced on Sunday that CEO Carlos Tavares has stepped down. His resignation follows significant disagreements with the board and mounting challenges, including disappointing sales and calls for his ouster.

Tavares’ departure comes as the company grapples with a sharp decline in sales, increasing inventory of unsold vehicles, and layoffs at multiple manufacturing plants. These issues have drawn criticism from the United Auto Workers (UAW) union and a council of Stellantis’ U.S. dealers, both of which questioned his leadership.

Differences with the Board

Henri de Castries, Senior Independent Director of Stellantis, stated in a press release that Tavares and the board held "different views," ultimately leading to his resignation. Tavares, 66, played a pivotal role in the merger of PSA Group and Fiat-Chrysler in 2021, creating Stellantis, now the fourth-largest automaker globally. Earlier this year, it was announced he planned to retire by early 2026, but this timeline has now been expedited.

Interim Leadership and Succession Plans

Stellantis has formed an Interim Executive Committee chaired by John Elkann, while a Special Committee of the Board works to identify a permanent successor, expected to be named by mid-2025.

Sales Challenges and Rising Vehicle Costs

Under Tavares’ leadership, Stellantis faced criticism for prioritizing profit margins over affordability. U.S. sales declined by 17% in the first nine months of the year, with global sales volume down 20% in the third quarter. Analysts noted that high prices for vehicles such as Jeep, Ram, Dodge, and Chrysler alienated traditional customers, with average prices reaching nearly $55,000 in Q3 2023, according to Edmunds.

Workforce Impact and Union Response

Layoffs also plagued Stellantis, including 1,200 workers at its Warren, Michigan plant and 1,100 workers at the Toledo Assembly Complex South plant. These actions, combined with delays in reopening the Belvidere, Illinois plant, led to UAW threats of renewed strikes, accusing the automaker of failing to honor contract agreements. Stellantis has denied these claims and pledged to contest any strike actions.

Criticism of Leadership and Compensation

Tavares' total compensation of €36.5 million ($36.8 million) for 2023 sparked backlash from both the UAW and dealers. UAW described his resignation as a "positive step" for a company it claimed had been mismanaged. Meanwhile, Kevin Farrish, chairman of Stellantis’ U.S. dealers’ council, criticized Tavares for focusing on short-term profits at the expense of competitive pricing and market share.

While Stellantis has made efforts to address some concerns, such as offering customer incentives and reshuffling its executive ranks, challenges remain. The company recently cut its 2024 profit forecast amid declining earnings and sales but affirmed its commitment to navigating the ongoing difficulties.

---