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REUTERS/Benoit Tessier/File Photo Carlos Tavares, Chief Executive Officer of Stellantis, speaks at the Paris Automotive Summit during the 2024 Paris Auto Show in Paris, France, October 15, 2024.
Reuters
12:21 JST, December 2, 2024
MILAN/DETROIT (Reuters) – Stellantis Chief Executive Carlos Tavares resigned abruptly on Sunday, two months after a profit warning at the maker of Jeep, Fiat and Peugeot cars that has lost around 40% of its value this year.
The company said it would seek to find a replacement CEO in the first half of 2025. Senior Independent Director Henri de Castries said in a statement that different views emerged in recent weeks among major shareholders, the board and Tavares resulting in the CEO’s resignation.
Stellantis said in a statement on Sunday that its board, including Chairman John Elkann, accepted the CEO’s resignation “with immediate effect” and that a new interim executive committee, chaired by Elkann, would be established.
Previously regarded as one of the most respected executives in the auto industry, Tavares’ approach came under scrutiny after slumping sales in North American led the automaker in September to issue a profit warning on its 2024 results.
That included a forecast for a cash burn of up to €10 billion ($10.6 billion), mostly due to slow sales and bloating inventories in its North American market, the group’s profit powerhouse.
The warning triggered a wide reshuffle of the group’s top management, including changes of its chief financial officer and of its head of North American operations, but initially spared Tavares.
After that, however, Stellantis said Tavares was not seeking a new CEO term and would retire at the end of his current mandate, in early 2026. The process to select a new CEO was initially set to be completed by the final quarter of next year.
Stellantis shares have lost around 40% of their value this year, while shares of U.S. rival Ford Motor are down 7% this year and General Motors up 55%.
Elkann, the scion of the Agnelli family which founded Fiat and is the top Stellantis shareholder through its investment company EXOR, thanked Tavares for his role in the creation of Stellantis, the world’s fourth largest carmaker by sales.
Other big shareholders include the Peugeot family and the French government, through public investment bank BPIfrance.
‘IT COULDN’T GET WORSE’
Jeff Laethem, who owns a Stellantis dealership in Detroit, said he was relieved at the news of Tavares’ resignation. The last year has been punishing for him as inventory has built up and sales of once-dependable vehicles dropped.
“It couldn’t get worse,” Laethem said, adding his nearby GM dealership has not faced the same challenges.
Stellantis dealers have become more vocal with their displeasure in the last few months, sending a letter outlining their concerns to Tavares in September. Sales of the automaker’s vehicles through the third-quarter of this year were down 17% in the U.S. compared to the year-ago period, with significant losses across the Dodge, Ram, Jeep and Chrysler brands.
The automaker has been struggling to sell even 2023 model-year cars, data provided to Reuters by car-shopping app CoPilot shows.
There are 112 days of supply on dealer lots of Ram 1500 pickup trucks and Jeep Wagoneers, CoPilot data shows, about 20 days higher than their respective rivals, the Chevrolet Silverado and Ford Expedition.
‘NEW IDEAS AND FRESH FORCES’
A source familiar with the matter told Reuters that tensions grew after the board felt Tavares was moving too quickly and focusing on near-term solutions to save his reputation, not working in the best interests of the company.
The sudden announcement on Sunday indicated that the fissures between the board and Tavares had to be severe, given that the parties decided it was better to operate with no CEO on a short-term basis, Bernstein analysts said.
Fabio Caldato, a portfolio manager at AcomeA SGR, which holds Stellantis shares, said “new ideas and fresh forces are needed to plan the company’s future.”
Tavares has led Stellantis since its creation in early 2021 through the merger of Fiat Chrysler and Peugeot owner PSA.
The company has 14 brands, and Tavares warned underperformers among the portfolio were at risk of being axed.
His outspoken style has often seen him in conflict with counterparts including U.S. unions and the Italian government, which complained about his decisions to reduce auto production in Italy.
In America, the United Auto Workers union threatened a nationwide walkout, alleging Stellantis failed to keep the commitments it made in a contract finalized last year. Stellantis said it has complied with the labor agreement.
“Tavares is leaving behind a mess of painful layoffs and overpriced vehicles sitting on dealership lots,” UAW President Shawn Fain said in a statement.
