CEO Tavares leaves Stellantis Group immediately (update)

On Sunday, the multinational automotive group Stellantis said that its chief executive officer, Carlos Tavares, has resigned, forcing the company to expedite its leadership transition amid a turbulent market environment.

Stellantis Group, like other European players, is severely suffering from the dire market conditions in the automotive industry. Not so long ago, CEO Carlos Tavares completely restructured its top management to tackle the problems.

At that moment, he also said that he wouldn’t prolong his stay at the top of the company and would depart at the end of his current contract at the beginning of 2026. Apparently, Agnelli’s heir, John Elkann, decided he and his board of directors couldn’t wait that long and pushed their much-lauded and now much-criticized CEO to the exit.

The group’s official announcement reads: “Stellantis NV announces that the Company’s Board of Directors, under the Chairmanship of John Elkann, accepted Carlos Tavares’ resignation today from his role as Chief Executive Officer with immediate effect.”

It continues: “The process to appoint the new permanent Chief Executive Officer is well underway, managed by a Special Committee of the Board, and will be concluded within the first half of 2025. Until then, a new Interim Executive Committee, chaired by John Elkann, will be established.”

From hero to…

Carlos Tavares, who played a crucial role in merging PSA Group, which included Peugeot and Citroën, with Fiat Chrysler to create Stellantis in 2021, departs amid significant challenges.

The company recently significantly lowered its 2024 profit forecast, citing an oversupply of unsold SUVs and pickup trucks in North America, its most important market, alongside weak demand in other regions. On Sunday, Stellantis confirmed its reduced annual outlook.

In the official announcement, Stellantis board member Henri de Castries, Senior Independent Director, commented on the case: “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, resulting in the Board and the CEO coming to today’s decision.”

Chairman John Elkann added, “Our thanks go to Carlos for his years of dedicated service and the role he has played in creating Stellantis, in addition to the previous turnarounds of PSA and Opel, setting us on the path to becoming a global leader in our industry.”

He concluded: “I look forward to working with our new Interim Executive Committee, supported by all our Stellantis colleagues, as we complete the process of appointing our new CEO. Together, we will ensure the continued deployment of the Company’s strategy in the long-term interests of Stellantis and its stakeholders.”

Richard Palmer has been appointed special advisor to Elkann and will participate in the interim executive committee. The official release says he will act as a sounding board to the leadership team. Palmer was the carmaker’s CFO until 2023.

Controversial

Since leaving Renault in 2013 after feuding with ‘the other Carlos’, his Renault boss Carlos Ghosn, who already stumbled in 2018, Carlos Tavares has been successful but also controversial. He was known as the cost-cutter ‘par excellence’, but he also brought his creation, the Stellantis group, to unknown heights in financial profits, earning him the nickname ‘Mister Double-digit’.

He could be stubborn and controversial in his sayings, too. A few years ago, he left the Association of European Car Manufacturers (ACEA) because he disagreed with the strategy to follow. In the recent debate about postponing the fines for trespassing EU CO2 targets for 2025, he didn’t hesitate to counter his CEO colleagues by saying that nothing had to change because some had not done their homework. He had done it.

However, the worldwide crisis in the automotive industry also badly hit his company, especially in the States, where half a million Chryslers and Jeeps are waiting for a customer, and high rebates have almost slaughtered the cash cow it formerly was for the whole group.

Just recently, the Stellantis CEO declared that he wouldn’t close any factory in France or Italy and that things were slowly changing for the better, confirming that the company was still aiming for a profit margin of 5.5 to 7%. Apparently, he couldn’t convince workers or shareholders anymore.

Unless the 66-year-old car industry tycoon emerges elsewhere, Tavares can now retreat in his Portuguese vineyards and drive his collection of oldtimers on the road and on the race track. A rumored ‘golden handshake of approximately € 100 million will surely also ease the pain.

Chasing de Meo?

Rumors have it that Renault boss Luca de Meo seems to be the main target since the Stellantis board has started its search for a new CEO, and Tavares decided to leave after his current mandate.

In an era where most car manufacturers are struggling with the cost of the energy transition and failing demand, Renault is one of the exceptions, succeeding in a turnaround that no one expected. Of course, this also attracts the interest of other company boards, seeing that their company needs ‘a fresh wind’.

Stock market alerted, unions happy

Meanwhile, the share of Stellantis on the Paris stock market went down more than 7%, dragging Renault with it (-4%). This year, the course of the Stellantis shares already receded by 46%.

The unions, on the contrary, seem to be relieved that the famous cost-cutter had to leave: Shwan Fain, the American UAW boss, said that this is “an important step in the good direction for a company which has been wrongly managed and where the personnel was ill-treated.”

In Italy, the leader of the CISL trade union told Sky TV on Monday that he won’t miss Tavares. “Tavares never belied in union relations; He simply delocalized. He put the brakes on vestments in Italy and got to the point of challenging the State. We think that his resignation will be a turning point.”

The leader of Italy’s largest labor union, CGIL, Maurizio Landini, asked Italian Prime Minister Giorgia Meloni to summon the management of Stellantis and the unions to discuss industrial policies and investments. “The Stellantis case confirms a need for the Premier to do this given the fact that just over 300,000 cars will be produced in Italian plants this year while there is a capacity of nearly 1.5 million.”

The president of the Italian Lower House’s Commission of Productive Activities, Alberto Gusmeroli, said on Monday that he had sent a letter requesting Stellantis Chairman John Elkann to report to parliament following the announcement late on Sunday that Carlos Tavares has quit as CEO of the Italian-French-American carmaker. “This morning, following the resignation yesterday of the CEO of Stellantis, I sent a letter requesting to hear President Elkann,” Gusmeroli said.

Also, on Monday, Business and Made in Italy Minister Adolfo Urso spoke with Stellantis Chairman John Elkann, who was in the United States, ministry sources told the Italian press agency ANSA. During the talks, a meeting scheduled to take place at the business and Made in Italy ministry on December 17 was confirmed, according to the same sources.

The meeting will be attended by the carmaker’s Chief Operating Officer for the Enlarged Europe region, Jean Philippe Imparato, “with the role of closing in a positive way talks on a plan for Italy, confirming the centrality of our country in Stellantis’s development projects,” the sources said.

The carmaker said on Monday that Stellantis’s Italy sales were down 24.6% to 30,817 vehicles in November compared to the same month in 2023. Its market share went down from 29.3% to 24.7%. During the course of 11 months in 2024, the group sold 428,205 cars, down 9.4% compared to the same period last year, and its market share fell from 32.4% to 29.4%.

The Stellantis board will have a lot on its plate these coming months. First, it must find a successor for Tavares who can reconcile all parties and put somebody trustworthy back at the helm. Second, 14 brands may be a little too much of the same, and some might disappear.

Thirdly, the American market situation has to be solved as soon as possible. The 2,500 dealers must get rid of half a million Chryslers, Dodges, Jeeps, and RAMs standing on their premises waiting to be sold. The European dealers are still furious about the too-hasty implementation of the so-called agency model (struggling with huge IT problems). And the quality of the products they had to sell has diminished.

Last but not least, Stellantis will have to accelerate its electrification process. Analysts think that Tavares hasn’t invested enough in the electrification and digitalization of future products in his strive to save as much money as possible. The group now threatens to lag behind in the European car industry’s fierce competition and steep upward trajectory.