Yesterday, the automotive giant Stellantis announced the resignation of its CEO, Carlos Tavares. In a statement, board chairman John Elkann thanked Tavares for his service and stated that he looks 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.” Elkann, heir to the billion-dollar Agnelli fortune, will assume control of the company through said committee, on top of his governance and oversight duties as chairman of the board, until a replacement is appointed, which the company estimates will happen in the first half of 2025. Stellantis says that the search for a new chief executive is already “well under way.”
Formerly the chief operating officer at Renault, followed by a stint as CEO of Groupe PSA, Tavares was one of the original architects of the merger between PSA and Fiat Chrysler Automobiles in 2019, landing him the job at the helm of the newly formed conglomerate, Stellantis. Having once dubbed himself a “performance psychopath,” Tavares’ career is one defined mostly by ruthless cost-cutting, a management style he likely learned from working under the then-CEO of Renault, Carlos Ghosn – another executive with Portuguese parentage and a French education, who was also known for similar strategies.
Stellantis boasted strong numbers over the past few years in the American market, reporting a 14% jump in sales in 2023 over the previous year, or some $72.8 billion. However, the figures are not as promising as they might initially appear, as they account for cars sold by Stellantis to dealers, not to the consumer. Car dealers selling Stellantis vehicles in the United States like Jeeps, Rams, Chryslers, and Dodges had over 120 days worth of sales on their lots, while the industry average stands at 59 days. Stellantis was patting itself on the back for getting cars to dealers, but if the cars are not flying off the lots, eventually something has to give: production gets cut at the factory, which leads to lower sales and earnings. In September, dealers were already sounding the alarm in a scathing missive to Tavares, warning of a “rapid degradation” of the brand due to “short-term thinking.”
The Stellantis dealers’ letter also raised the question of affordability, telling Tavares to get back to making cars “that Americans want to buy and can afford.” The company’s strategy of going for higher priced models with higher profit margins per vehicle has not born fruit. Stellantis models like the Jeep Grand Cherokee have been undercut by similar vehicles at lower price points, like the Hyundai Santa Fe. “They just can’t afford this,” industry analyst Jessica Caldwell told CNN earlier this month, explaining that Stellantis’ typical consumers could not follow the brand towards the higher prices it was seeking. “That’s the wall they’re hitting. Fundamentally they have a product mismatch for the market.”
Tavares was the highest paid automotive executive in 2023, taking home over $40 million.
