Stellantis, the maker of Chrysler, Jeep, Fiat and Peugeot among other brands, announced Sunday that embattled CEO Carlos Tavares has resigned due to differences with the board and in the face of disappointing sales and calls for his ouster.
The departure follows a steep drop in Stellantis’ sales, with a glut of unsold vehicles on dealers’ lots, layoffs at several of its plants, calls for Tavares’ departure from the United Auto Workers (UAW) union, which represents its US workers, and scathing criticism of his tenure from a council of the company’s US dealers.
Tavares and the Stellantis board of directors had “different views,” which led to his resignation, Stellantis’ senior independent director Henri de Castries said in a statement.
Tavares, 66, a Portuguese businessman, was central to the deal that merged French automaker PSA Group, maker of Peugeot, and the European-American automaker Fiat-Chrysler into the newly named Stellantis, which is the fourth-largest automaker in the world behind Toyota, Volkswagen Group and Hyundai Motor Group. He had been chairman of PSA Group ahead of that deal, which closed in January 2021. Earlier this year, it was announced that Tavares would retire at the end of his contract in early 2026.
“The process to appoint the new permanent chief executive officer is well under way, managed by a special committee of the board, and will be concluded within the first half of 2025. Until then, a new interim executive committee, chaired by John Elkann, will be established,” the company said.
The company said in an email to CNN that it has no further comments.
Shares in Stellantis (STLA) fell more than 8% Monday.
“The CEO replacement process was brought forward by (around) six months, which reduces the period of uncertainty,” UBS analysts wrote in a note, adding that Stellantis could see a “turnaround” next year.
The decision for Tavares to step down came amid high prices for its cars and trucks in North America that drove down sales and disappointed its traditional customer base.
Global sales volume for the first half of this year fell 10%, and in the third quarter plunged 20%. US sales are down 17% in the first nine months of the year. Experts told CNN that the average price of the Jeep, Ram, Dodge and Chrysler vehicles had gotten too high for the core customers of those brands.
By the fourth quarter of 2023, the average Stellantis vehicle sold for $58,000 in the United States, according to data from automotive site Edmunds. While Stellantis’ US average price has declined since then, it was still the second-highest average price in the industry, at just under $55,000 in the third quarter.
The company laid off about 1,200 workers at its truck plant in Warren, Michigan, coinciding with the discontinuation of the entry-level Ram 1500 Classic pickup. The elimination of a shift at that plant took effect in October. In November, Stellantis announced plans to cut one of two shifts in January at its Toledo Assembly Complex South plant, which builds the Jeep Gladiator pickup, indefinitely laying off about 1,100 workers.
Those layoffs — and the company’s slow pace in bringing back workers to a closed plant in Belvidere, Illinois — has the union threatening to wage a new strike against Stellantis. The UAW said Stellantis was not living up to the terms of the contract reached after strikes a year ago against the automaker. Stellantis has denied it is in violation of the contract and has vowed to challenge the legality of any new strike.
Strong profits in 2023 led Stellantis to pay Tavares €36.5 million in total compensation, which comes to $38.4 million at current exchange rates. The pay package sparked strong criticism.
“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 a letter in August, Kevin Farrish, chairman of the company’s US dealers’ council, which represents the independent businesses that sell its vehicles to car buyers, blamed decisions made by Tavares for many of Stellantis’ problems. Farrish said Tavares put too much emphasis on increasing profit margins and executive pay and not enough on producing vehicles at competitive prices.
“In 2023, you engineered a record year of profitability for Stellantis, earning you the title of highest-compensated automotive CEO,” Farrish wrote in the letter. “The reckless short-term decision-making to secure record profits in 2023 has had a devastating, yet entirely predictable consequences in the US market.”
Farrish pointed to plant closing announcements and the loss of US market share, among other problems.
While Farrish told CNN last month that steps by Stellantis to shake up its executive ranks and to offer incentives to buyers of its vehicles had stemmed some of the worst of the problems, he still had concerns about the direction of the company.
Farrish did not have an mmediate comment on Tavares’ departure.
In October, Stellantis cut its 2024 profit forecast because of declining earnings and sales. It said Sunday that it stands by its lowered earnings forecast for the year.
This story has been updated with additional content.
