In a surprising turn of events, Carlos Tavares, the CEO of Stellantis, has stepped down from his role with immediate effect, citing “different views” with the board of directors. The announcement, made on Sunday, marks the abrupt end of Tavares’ tenure at the helm of the world’s fourth-largest carmaker, formed through the 2021 merger of Fiat Chrysler Automobiles and PSA Groupe. Known for his strategic leadership and cost-saving measures, Tavares had previously been hailed for orchestrating the merger and establishing Stellantis as a profitable automotive powerhouse.
Henri de Castries, the senior independent director of Stellantis, acknowledged the growing differences in a statement: “Stellantis’ success since its creation has been rooted in a perfect alignment between the reference shareholders, the Board, and the CEO. However, in recent weeks, different views have emerged, leading to today’s decision.” Chairman John Elkann will head an interim executive committee while the company seeks a new CEO, a process expected to conclude by mid-2024.
Financial Struggles and Market Challenges
Carlos Tavares’ resignation comes amidst a turbulent period for Stellantis, marked by declining sales and disappointing financial results. The company’s U.S. market—historically a key revenue driver—has faced challenges including high prices, reduced investment in product updates, and aggressive cost-cutting. Stellantis lowered its annual financial targets in September following a sharp 27% drop in third-quarter net revenues.
Global sales have also taken a hit, with a 20% decline in vehicle sales year-over-year in the third quarter of 2024. The U.S. market has particularly struggled, with Carlos Tavares previously acknowledging what he termed “arrogant” errors in strategy. U.S.-traded shares of Stellantis have plummeted by 43% this year, reflecting investor concerns about the company’s performance and outlook.
Cost-Cutting Controversies and Union Backlash
Carlos Tavares’ leadership style, characterized by rigorous cost-cutting, has been both praised and criticized. Since the merger, Stellantis has reported €8.4 billion ($9 billion) in savings, achieved through supply chain restructuring, operational streamlining, and significant workforce reductions. The company has cut its global workforce by 15.5%, or approximately 47,500 employees, since 2019. Further layoffs in the U.S. and Italy in 2023 have sparked backlash from labor unions and raised concerns about long-term sustainability.
The United Auto Workers (UAW) union has been a vocal critic of Tavares, citing layoffs and plant closures as reasons for his removal. Additionally, Stellantis’ U.S. dealership network has expressed frustration over inventory issues and insufficient financial support, exacerbating tensions within the company. Despite these criticisms, Carlos Tavares defended his strategies, arguing in July that blaming budget cuts for operational challenges was misplaced.
As Stellantis navigates this leadership transition, industry watchers will closely monitor how the automaker addresses its current challenges, particularly in the competitive U.S. market. The company’s next CEO will face the formidable task of steering Stellantis back toward growth while reconciling internal divisions and addressing external pressures.
