The company, facing slumping sales, announced that Carlos Tavares would step down immediately and that a search for a new chief was underway.
By Doge Ryen | Dec 03, 2024 Updated 02:27 a.m. ET
The chief executive of the automaker Stellantis, Carlos Tavares, has resigned, the company said on Sunday, amid a decline in profits and slumping sales in its key North America region.
Mr. Tavares, 66, spearheaded the creation of the company in a 2021 merger of Fiat Chrysler Automobiles and France’s Peugeot SA. The company is one of the largest automakers in the world and produces vehicles under an array of brand names, including Chrysler, Jeep, Ram, Dodge, Fiat, Peugeot, Opel and Maserati.
“Stellantis’ success since its creation has been rooted in a perfect alignment between the reference shareholders, the board and the C.E.O.,” the company’s senior independent director, Henri de Castries, said in a statement. “However, in recent weeks different views have emerged which have resulted in the board and the C.E.O. coming to today’s decision.”
Mr. Tavares could not immediately be reached for comment.
The resignation took effect on Sunday, the company said in the statement. Earlier this year, Mr. Tavares had announced that he planned to retire at the end of his current contract, in 2026. The company also said that a search for a successor by a special board committee is “well underway.” It added that a new executive committee, headed by John Elkann, the chairman of the Stellantis board, would run the company until a permanent replacement for Mr. Tavares is named.
Mr. Elkann is the grandson of Gianni Agnelli, the Italian industrialist who founded Fiat. Mr. Elkann worked closely with Sergio Marchionne, who engineered Fiat’s 2009 takeover of Chrysler, which was going through a bankruptcy.
Fiat Chrysler became profitable and grew under Mr. Marchionne, who died unexpectedly in 2018.
By 2020, though, both Fiat Chrysler and Peugeot were struggling to keep pace with other automakers that were investing tens of billions of dollars to develop and produce electric vehicles, and a merger between the two companies was forged. The combined company renamed itself Stellantis in 2021.
Under Mr. Tavares, Stellantis flourished for a time following the trans-Atlantic merger, and reported a record profit of 18.6 billion euros, about $19.7 billion, in 2023. He also outlined plans to develop E.V.s, although Stellantis was moving at a slower pace than its Detroit rivals, General Motors and Ford Motor. Bonuses stemming from the 2023 results helped make Mr. Tavares one of the highest paid executives in the auto industry.
Read more on Cars
-
C.E.O. of Stellantis, Which Owns Chrysler and Jeep, Resigns
-
How China Became the World’s Largest Car Exporter
-
Cadillac execs are betting the ‘baby Escalade’ Vistiq will maintain its strong EV momentum
But the company’s profits have fallen this year, as sales in the United States dropped significantly. It was slow to match rivals’ price reductions and sales incentives, and dealer inventories rose. In response, Stellantis has laid off workers, cut production and left idle a plant in Illinois that it had planned to restart.
In the first nine months of the year, Stellantis’s U.S. sales fell 17 percent. In September, a group of dealers sent Mr. Tavares an open letter, blaming him for decisions aimed at driving up profits in 2023 that they said left the company in a troubled state.
“The intent of this letter is to sound an alarm — an alarm, not only to you, but to the Stellantis board of directors, your employees, your investors, and your suppliers,” the letter said. “The reckless short-term decision making to secure record profits in 2023 has had devastating, yet entirely predictable, consequences in the U.S. market.”
Soon after, Stellantis issued a profit warning, saying the cost of fixing its U.S. operations would dent its bottom line. Specifically, the company said operating profit would, at best, amount to 7 percent of sales compared with an earlier forecast of more than 10 percent.
The company’s stock price has dropped more than 50 percent this year, from a high of more than $29 in March to $13.20, its close on Friday.
The transition to electric vehicles has presented challenges for many automakers. While G.M., Toyota and Tesla continue to post substantial profits, Ford and Volkswagen have struggled to make money on E.V.s. The E.V. start-up Rivian, has had trouble ramping up sales beyond about 50,000 vehicles a year.
Volkswagen recently said it could close as many as three plants, including factories in Germany, a once-unthinkable step for the company.
Mr. Tavares was born and educated in Portugal, and joined Renault in his early 20s. He rose through the ranks and became a close lieutenant of Carlos Ghosn, who was the chief executive of both Renault and Nissan. Mr. Tavares worked at the Japanese automaker Nissan for several years while it was controlled by Renault. He left Renault amid a falling out with Mr. Ghosn in 2013, and was hired as Peugeot’s chief executive a year later.
Last month, Mr. Tavares announced a new design for large pickup trucks and sport-utility vehicles, including electric models, and said Stellantis was on track to slash carbon emissions from its vehicles and factories by 2038. “This is our commitment to no-compromise innovation as we deliver clean, safe and affordable mobility to all,” he said.
Be First to Comment