Stellantis CEO Carlos Tavares speaks during a news conference following a meeting with unions, March 31, 2022, in Turin, Italy. (Fabio Ferrari/LaPresse via AP.The Canadian Press)
Stellantis, the company behind Jeep and Ram, is searching for a successor to CEO Carlos Tavares, as part of what it calls a "normal leadership succession process." Despite this, speculation has arisen due to the company’s recent struggles, especially in the U.S. market.
Tavares, who has been at the helm since 2021 following the merger of PSA Peugeot and Fiat Chrysler Automobiles, has faced increasing pressure. U.S. dealers and the United Auto Workers (UAW) have criticized him following a tough first half of the year, during which Stellantis was left with excess high-priced inventory on dealer lots. This led to a sharp decline in profits and sales in the North American market, traditionally the company’s most lucrative region.
In a statement released Monday, Stellantis confirmed that Tavares' current contract runs until 2026, but the company is exploring leadership options. While Stellantis suggested that Tavares could potentially extend his tenure, others believe a change is likely. Erik Gordon, a professor at the University of Michigan, suggested that the announcement indicates the board may have already decided to replace Tavares. He believes the company is aiming to handle the leadership transition smoothly to avoid any appearance of disorder.
Under Tavares' leadership, Stellantis has taken several cost-cutting measures, including postponing factory openings, laying off workers, and offering buyouts to employees. The company’s financial performance has been challenging, with first-half profits down 48% from last year and U.S. sales dropping nearly 16%, despite overall industry growth.
Tavares has faced backlash from both U.S. dealers and the UAW. The UAW, led by President Shawn Fain, called for his removal after Stellantis delayed plans to reopen a plant in Belvidere, Illinois, and build an electric vehicle battery facility. Fain accused Tavares of mismanagement, pointing to the relative success of competitors like Ford and General Motors.
Despite these setbacks, Stellantis remains committed to its plans, including the reopening of the Belvidere plant and the construction of the battery facility. The company has been working to reduce excess inventory, with notable progress in recent months. Chief Financial Officer Natalie Knight recently announced that the company reduced its inventory by 40,000 vehicles between July and August, with plans to cut another 100,000 by early next year.
Tavares acknowledged the company’s struggles in North America, admitting that they overstocked vehicles and set prices too high, driving customers away. The CEO search was first reported by Bloomberg News.
