Stellantis CEO Carlos Tavares resigned amid troubles in the US

DETROIT — Starry Chief Executive Carlos Tavares unexpectedly resigned from the automaker amid increasingly divergent views between the chief executive and the board of directors, the company said on Sunday.

The world's fourth-largest automaker said its board accepted Tavares' resignation on Sunday. His departure is effective immediately.

SUV maker Stellantis said its process to appoint a new chief executive is “underway” and that it expects to complete the search in the first half of next year. Until then, the company said it would establish a new interim executive committee led by chairman John Elkann.

“The success of Stellantis since its inception is rooted in the perfect alignment between the reference shareholders, the board and the CEO. However, different points of view have emerged in recent weeks which have led the board and the CEO to reach today's decision,” Henri de Castries, Senior Independent Director of Stellantis, said in a statement.

A spokesman for Stellantis declined to disclose further information about the resignation.

The automaker's U.S.-traded shares fell roughly 8 percent in premarket trading Monday. Before the resignation, the stock had fallen about 43% in 2024.

“The market will inevitably question why the Stellantis board felt that not having a permanent CEO for several months was preferable to keeping the current CEO in place,” Bernstein analyst Daniel Roesca said in a note to investors on Sunday evening. “We struggle to identify any scenario where these events can be positively spun as far as the share price is concerned.”

Stellantis on Sunday reaffirmed his previously downgraded leadership for the year, which included adjusted operating income of 5.5% and 7% and free industrial cash flow between minus €5 billion to minus €10 billion.

Tavares' resignation comes less than two months after the company announced he would retire at the end of his contract in early 2026. At the time, Stellantis said it planned to name a successor by the fourth quarter of next year.

Tavares led Stellantis from its inception until the 2021 merger. between Fiat Chrysler Automobiles and PSA Groupe, where he has been Chairman of the Board since 2014.

The longtime auto veteran — a prodigy of former Nissan CEO Carlos Ghosn — has been widely touted in recent years for spearheading the merger and turning Stellantis into one of the world's most profitable automakers.

But this year the company's financial results have fallen well short of expectations amid mismanagement of the US market – its main cash generator – with a lack of investment in new or updated products, historically high prices and extreme cost-cutting measures.

The company, which also owns brands such as Dodge, Fiat, Chrysler and Peugeot, lowered its annual guidance in September, a month before the automaker reporting a 27% decline in the third quarter net income.

“Confidence in Carlos Tavares was severely undermined by the collapse in profitability of Stellantis' North American operations, which led the group to reduce its guidance for 2024. on Sept. 30,” Bernstein's Roeska said.

StarrySales have also struggled this year. Most recently, the company reported a approximately 20% decline in global cars sold in the third quarter on a year-over-year basis. That includes an extension of a long free fall in the U.S., despite Tavares' attempts to correct what he called “arrogant” mistakes.

Tavares has made cutting costs mission critical for Stellantis, including self-evaluation 8.4 trillion euros ($9 trillion) in reductions from the merger.

Cost-saving measures include restructuring the company's supply chain and operations, as well as reducing the number of employees in the US and increasing work in lower-cost countries such as Brazil and Mexico.

Several current and former Stellantis executives, who spoke on condition of anonymity because of potential repercussions, described earlier CNBC's layoffs as exhausting to the point of excess and leading to problems in the US

Tavares rejected the claim that the company's massive cost-cutting efforts had created problems.

“When you're not performing for whatever reason…you might want to use a scapegoat. Cutting the budget is easy. It's wrong,” Tavares said in July.

Stellantis reduced headcount by 15.5%, or approximately 47,500 employees, between December 2019 and and the end of 2023, according to public filings. Additional job cuts this year involving thousands of workers at plants in the US and Italy have drawn the ire of unions in both countries.

The United Auto Workers union is calling The removal of Tavares for several months as its members face layoffs and production cuts. Stellantis' US dealer network also came out against Tavares amid bloated inventory and the company's lack of financial support to sell vehicles.

UAW President Sean Fein in a statement Sunday night welcomed Tavares' resignation, calling it “a major step in the right direction for a company.”

“Thousands of UAW members at Stellantis called on the company to fire Carlos Tavares for his reckless mismanagement of the company,” Fein said. “We look forward to seeing how the company responds to the pressure and corrects course.”