Stellantis CEO Carlos Tavares Steps Down Amid Boardroom Discord and Market Struggles

Carlos Tavares, the CEO of Stellantis, has abruptly resigned from the automaker due to mounting differences with the board of directors. This development, announced on Sunday, is effective immediately and brings an unexpected end to the tenure of the leader who was instrumental in forming the world’s fourth-largest carmaker through the 2021 merger of Fiat Chrysler Automobiles and PSA Groupe.

Resignation Details and Interim Plans

• Stellantis’ board stated that diverging views between Tavares and its members had culminated in the decision.
• Until a permanent CEO is selected in the first half of 2025, chairman John Elkann will head an interim executive committee.

Henri de Castries, Stellantis’ senior independent director, emphasized the importance of alignment among the CEO, board, and shareholders, which had underpinned the company’s earlier successes.

Challenges Under Tavares’ Leadership

Tavares’ resignation follows a challenging year for Stellantis, characterized by significant financial and operational setbacks:

• Financial Underperformance: The company reported a 27% drop in Q3 net revenues and revised its 2024 guidance downward.
• Declining Sales: Global vehicle sales fell by roughly 20% year-over-year in Q3, with a steep decline in its critical U.S. market.
• Stock Slide: U.S.-traded Stellantis shares are down approximately 43% in 2024.

Cost-Cutting Fallout

A hallmark of Tavares’ tenure was aggressive cost-cutting, aimed at achieving €8.4 billion ($9 billion) in savings post-merger. However, these measures have drawn criticism:

• Workforce Reductions: The company reduced its workforce by 15.5% (around 47,500 employees) from 2019 to 2023, with further layoffs in 2024, angering unions in the U.S. and Italy.
• Dealer and Union Backlash: U.S. dealerships accused Stellantis of neglecting financial support, while the United Auto Workers (UAW) union had been calling for Tavares’ removal.

Tavares’ Legacy and Fallout

Once celebrated for orchestrating the Stellantis merger and delivering record profitability, Tavares’ legacy now faces scrutiny due to the automaker's declining fortunes. The internal discord, along with mounting pressure from unions and dealerships, suggests his aggressive strategies may have contributed to the company’s struggles.

What Lies Ahead for Stellantis?

The resignation creates both uncertainty and opportunity for Stellantis. With a new CEO expected by mid-2025, the company must address key issues, including:

1. Reinvigorating the U.S. Market: Investments in updated products and competitive pricing strategies are essential.
2. Repairing Stakeholder Relations: Rebuilding trust with workers, unions, and dealerships will be critical.
3. Strategic Vision: Balancing cost efficiency with growth investments will determine the automaker's ability to regain its footing.

Stellantis now stands at a crossroads, tasked with navigating a turbulent transition while maintaining its position as a global automotive powerhouse.