Carlos Tavares, CEO of Stellantis, resigns

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CNN
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Stellantis, the maker of Chrysler, Jeep, Fiat and Peugeot, among others, announced Sunday that embattled CEO Carlos Tavares has resigned amid differences with the board and amid disappointing sales and calls for his ouster.

The resignation comes after a sharp decline in sales at Stellantis, a flood of unsold vehicles on dealer lots, layoffs at several of its plants and calls for his departure from the United Auto Workers union, which represents its U.S. workers, as well as sharp criticism of his tenure advice from his US dealers.

Tavares and the Stellantis board had “different views” that led to his resignation, Stellantis’ senior independent director Henri de Castries said in the release.

Tavares, 66, a Portuguese businessman who played a central role in the deal that merged French automaker PSA Group, maker of Peugeot, and European-American automaker Fiat-Chrysler to form the newly named Stellantis, the world’s fourth-largest automaker behind Toyota , Volkswagen Group and Hyundai Motor Group. Prior to this deal, which closed in January 2021, he had been CEO of PSA Group. It was announced earlier this year that Tavares would retire at the end of his contract in early 2026.

“The process to appoint the new permanent Chief Executive Officer is well underway, will be led by a special committee of the Board and will be completed in the first half of 2025. Until then, a new interim executive committee, chaired by John Elkann, will be established,” the company said in a press release.

The company said in an email to CNN that it had no further comment.

Tavares’ decision to step down came amid high prices for his cars and trucks in North America, which led to a decline in sales and disappointment among its traditional customer base.

Global sales volume fell 10% in the first half of this year and fell 20% in the third quarter. U.S. sales fell 17% in the first nine months of the year. Experts told CNN that the average price of Jeep, Ram, Dodge and Chrysler vehicles has become too high for those brands’ core customers.

According to data from automotive site Edmunds, the average Stellantis vehicle in the United States sold for $58,000 through the fourth quarter of 2023. Although Stellantis’ U.S. average price has fallen since then, it was still the second-highest average price in the industry at just under $55,000 in the third quarter.

The company laid off about 1,200 workers at its truck plant in Warren, Michigan, coinciding with the discontinuation of the entry-level Ram 1500 Classic pickup truck. The elimination of a shift at this plant took effect in October. In November, Stellantis announced plans to eliminate one of two shifts and indefinitely lay off about 1,100 workers in January at its Toledo Assembly Complex South plant, which builds the Jeep Gladiator pickup truck.

Those layoffs — and the company’s slow pace of returning workers to a shuttered plant in Belvidere, Illinois — have led the union to threaten a new strike against Stellantis. The UAW said Stellantis is not abiding by the terms of the contract, which was reached after strikes against the automaker a year ago. Stellantis denied breach of contract and said it would challenge the legality of any new strike.

The strong earnings in 2023 resulted in Stellantis paying Tavares total compensation of €36.5 million, equivalent to $36.8 million at current exchange rates. The salary package sparked strong criticism.

“The UAW welcomes the resignation of Stellantis CEO Carlos Tavares, an important step in the right direction for a company that has been mismanaged and a workforce that has been mistreated for too long,” the UAW said in a statement. “We are pleased that the company is responding to the pressure and correcting course.”

In August, Kevin Farrish, chairman of the company’s U.S. dealer council, which represents the independent companies that sell its vehicles to car buyers, wrote a letter blaming much of the problems on decisions made by Tavares. Farrish said Tavares placed too much emphasis on increasing profit margins and executive salaries and not enough on producing competitively priced vehicles.

“In 2023, you created a record year of profitability for Stellantis and earned you the title of highest-compensated automotive CEO,” Farrish wrote in the letter. “Reckless short-term decision making to secure record profits in 2023 has had devastating but entirely predictable consequences for the U.S. market.”

Farrish referred, among other things, to the announcement of factory closures and the loss of market share in the USA.

While Farrish told CNN last month that Stellantis’ moves to shake up its leadership and offer incentives to buyers of its vehicles had curbed some of the worst problems, he still had concerns about the company’s direction.

Farrish had no immediate comment on Tavares’ departure.

In October, Stellantis lowered its 2024 profit forecast due to declining profits and sales. On Sunday it was said that the lowered profit forecast for the year would remain.