Stellantis hunting for possible successor to CEO Carlos Tavares

Stellantis is now looking for a new CEO to replace current chief executive Carlos Tavares when his contract ends in early 2026.

Driving the news: The automaker confirmed its decision to identify a new CEO on Monday as part of regular succession planning, with company chairman John Elkann leading the hunt. Tavares is included in the search and is not expected to leave his position before his contract expires.

• Unnamed sources told Bloomberg News that Elkann is unhappy with Stellantis’ performance in the North American market.

• Company profits plunged 48% year-over-year in the first half of 2024, which was also marked by a spur of executive departures in North America. Sales also dipped 21% from 2023, leaving dealers with swollen, aging inventories.

Behind the scenes: A Stellantis spokesperson said it was “normal” for the automaker to look for a replacement at this time and noted that Tavares may still retain his position after 2026. At the same time, pressure has quickly mounted on Stellantis, both internally and externally, to change course and overcome its challenges in the North American market, which remains the company’s biggest profit center.

• Earlier this month, members of the Stellantis National Dealer Council (SNDC), in an open letter, claimed Tavares “engineered a record year of profitability” in 2023, resulting in “devastating, yet entirely predictable, consequences.”

• While the SNDC didn’t call for a new CEO, the company quickly pushed back, calling the letter an example of “public, personal attacks.” It also said it had enacted a new plan which had already bumped sales 21% month-over-month in August and cut dealer inventory by roughly 10% since June.

• Stellantis also rejected an offer to sell Chrysler to a descendent of the company’s founder, who expressed similar frustrations to the SNDC in a separate letter.

Zooming in: Stellantis has challenges on multiple fronts. In 2023, it maintained the highest average transaction price in the U.S. market, allowing it to score record profits despite unremarkable sales.

• At the same time, its hesitancy to cut prices in the aftermath of the COVID-19 pandemic is often attributed to its current profitability struggles.

• Worries also persist over the brand’s electric vehicle strategy. The automaker is currently planning to release multiple EVs in the U.S., including a sub-$25,000 Renegade SUV. EV sales continue to grow, but adoption remains slower than expected.

• While Stellantis is hoping to lower labor costs through layoffs and voluntary separation programs, there is also concern that doing so will hurt its long-term ability to expand, especially after losing top leaders in the U.S.

Bottom line: Last year, Tavares became the highest-paid automotive CEO (excluding Tesla’s Elon Musk). Now, with pressure mounting on all sides and less than two years before his contract ends, he will need to overcome accusations of short-sightedness and prove he can lead the company on the path to recovery. Stellantis leaders are set to hold a meeting early next month to discuss strategies for rebuilding the company’s market share in the U.S.

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