The embattled CEO of Stellantis, maker of Chrysler, Jeep, Fiat, and Peugeot, among others, announced Sunday that he is resigning amid disappointing sales and calls for his ouster due to differences with the board.
The departure comes at a time when Stellantis has seen a sharp decline in its sales, a glut of unsold vehicles on dealers’ lots, and layoffs at several of its plants and calls for his departure from the United Auto Workers union, which represents its US workers, and also scathing criticism of his tenure from a council of its US dealers.
The board of directors of Stellantis “had different views,” Senior Independent Director Henri de Castries said in words that led Tavares to quit.
The new boss at the heart of the deal is Tavares, 66, a Portuguese businessman merging French automaker PSA Group, which owns Peugeot, with European-American automaker Fiat-Chrysler into the newly named Stellantis, the world’s fourth largest behind Toyota, Volkswagen Group, and Hyundai Motor Group.
Earlier, he had been chairman of PSA Group before that deal was concluded last January 2021. At an earlier date this year, it was announced that Tavares would retire at the expiration of his contract in early 2026.
The process to select the permanent Chief Executive Officer will continue unabated, guided by a Special Committee of the Board and concluded prior to the first half of 2025. Ahead of that, a new Interim Executive Committee headed by John Elkann shall be constituted, the company statement said as it issued its latest news release.
According to an e-mail sent to BBC News by the company, it will not make any comment further.
The decision to make Tavares leave was made by increasing car and truck prices in North America that were so high that sales decreased and disappointed its traditional customer base.
The global sales volume of the first half of this year was down 10% while in the third quarter of this year plummeted 20%. The US sales were down 17% in the first nine months of this year. According to the experts who talked to BBC News, the average price of the Jeep, Ram, Dodge and Chrysler vehicles had got too high for the core customers of those brands.
Data from automotive site Edmunds shows that the average Stellantis vehicle sold for $58,000 in the United States by the fourth quarter of 2023. Stellantis’ US average price has fallen since then but was still the second-highest average price in the industry at just under $55,000 in the third quarter.
It had axed around 1,200 workers at its truck plant in Warren, Michigan, as part of its move to end producing the entry-level Ram 1500 Classic pickup. The automaker said that it would end a shift at that plant in October. Stellantis said in November it will end one of two shifts at its Toledo Assembly Complex South plant, which builds the Jeep Gladiator pickup, meaning eliminating some 1,100 workers and providing no date for the cut.
Those layoffs — and the slow pace of bringing back workers at a closed plant in Belvidere, Illinois — have the union threatening a new strike against Stellantis. The UAW said it felt Stellantis is not living up to terms of the contract reached last year after strikes against the automaker. Stellantis has denied that it was in violation of the contract and vowed to challenge the legality of any new strike.
High profits for 2023 prompted Stellantis to pay Tavares the total compensation of 36.5 million euros; today that’s $36.8 million. The pay package caused much resentment.
The UAW welcomes the resignation of Stellantis CEO Carlos Tavares, a major 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 to see the company responding to pressure and correcting course.
In August, Kevin Farrish, the leader of the company’s US dealers’ council that represents the independent businesses selling its cars to buyers, sent an open letter to which, on the surface, much of the criticism appears targeted at Tavares. Farrish criticized Tavares for devoting too much attention to maximizing profit margins and executive pay and not enough to making it at prices competitive with competitors.
In a letter, Farrish wrote, “In 2023, you engineered a record year of profitability for Stellantis, earning you the title of highest compensated automotive CEO,” adding that “the reckless short-term decision-making to secure record profits in 2023 has had a devastating, yet entirely predictable, consequences in the US market.”.
According to Farrish, some of the problems include the announcement of plant closings and loss of US market.
While the CEO said last month to BBC News that some actions taken by Stellantis to shake up its executive ranks and to offer incentives to buyers of its vehicles had begun to stem some of the worst of the problems, he still had many concerns about the direction of the company. Farrish was not at liberty to comment on Tavares’ departure immediately. The automobile giant lowered its 2024 profit forecast in October following sliding earnings and sales. Stellantis Sunday said it stands behind the reduced earnings forecast for the year.