Stellantis, the parent company of brands like Chrysler, Jeep, Fiat, and Peugeot, announced on Sunday that CEO Carlos Tavares has resigned due to differences with the board and declining sales. His departure comes amid a significant drop in sales, with a large number of unsold vehicles sitting on dealership lots. Additionally, Stellantis has faced layoffs at various plants and increasing pressure from the United Auto Workers (UAW), which represents its U.S. workforce, as well as criticism from a group of U.S. dealers. Henri de Castries, Stellantis’ senior independent director, stated that Tavares and the board had differing views, which led to the CEO’s resignation.
Tavares, 66, played a pivotal role in the merger of the French PSA Group, which owns Peugeot, with Fiat-Chrysler, resulting in the creation of Stellantis in January 2021. Prior to this, Tavares was chairman of PSA. Earlier this year, it was announced that he would retire by the end of his contract in 2026. The company confirmed that a search for a new permanent CEO is underway, with the process expected to be completed by mid-2025. Until then, an interim executive committee will be led by John Elkann.
Stellantis shares dropped more than 8% on Monday following CEO Carlos Tavares’ resignation. UBS analysts noted that advancing the CEO replacement process by about six months helps reduce uncertainty, and they anticipate a potential “turnaround” for the company next year. Tavares’ resignation comes amid challenges in North America, where high vehicle prices have led to declining sales and disappointed traditional customers. In the first half of this year, global sales dropped 10%, and by the third quarter, they fell by 20%. U.S. sales were down 17% through the first nine months. Experts pointed out that the rising prices of Jeep, Ram, Dodge, and Chrysler vehicles had priced out many of their core customers.
By the end of 2023, the average Stellantis vehicle in the U.S. sold for $58,000. While the price has since decreased, it remained the second-highest in the industry, just under $55,000 in the third quarter. In addition to the sales decline, Stellantis has made layoffs. Around 1,200 workers were let go from its truck plant in Warren, Michigan, following the discontinuation of the entry-level Ram 1500 Classic pickup and the elimination of a shift at the plant in October. In November, the company also announced plans to cut one of two shifts at its Toledo Assembly Complex South plant, which produces the Jeep Gladiator, leading to the indefinite layoff of about 1,100 workers in January.
The union is threatening to strike against Stellantis due to recent layoffs and the company’s slow progress in reopening a closed plant in Belvidere, Illinois. The UAW claims that Stellantis has not adhered to the terms of the contract reached after last year’s strikes. Stellantis denies violating the contract and plans to challenge the legality of any potential strike. Despite strong profits in 2023, which led to a €36.5 million ($38.4 million) pay package for CEO Carlos Tavares, his compensation has drawn significant criticism. The UAW welcomed his resignation, calling it a positive step for a company that they believe has mismanaged and mistreated its workforce.
In an August letter, Kevin Farrish, chairman of Stellantis’ U.S. dealers’ council, blamed Tavares for many of the company’s issues. Farrish argued that Tavares focused too much on boosting profit margins and executive pay while neglecting to produce vehicles at competitive prices. He criticized the “reckless short-term decisions” that led to a record year of profitability in 2023, but also resulted in plant closures and a loss of market share in the U.S. Although Farrish acknowledged that recent steps by Stellantis to adjust its leadership and offer buyer incentives had helped address some of the issues, he remained concerned about the company’s direction. He did not immediately comment on Tavares’ resignation.
In October, Stellantis lowered its 2024 profit forecast due to declining earnings and sales, and the company reaffirmed this adjusted forecast on Sunday.