Milan, Italy

Stellantis' CEO, Carlos Tavares, stepped down abruptly on Sunday, only two months after the automaker warned of a loss due to weak U.S. sales. The resignation, unexpected and bound to have a dramatic impact on the shares of the world's fourth largest carmaker, is a turning point for the company.  

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But the company said in a statement that its board, including Chairman John Elkann, had accepted Tavares' resignation "with immediate effect." Elkann, who was appointed to an interim executive committee to run the region's operations, said that Stellantis will search for a permanent CEO and the process should be completed by mid-2025.  

It began when Stellantis warned of September profits in September and then followed that up with the departure in October of CEO Pierre Bernardin, who had been hailed as a top-tier automotive executive. The automaker forecasted it could burn as much as €10 billion (USD 10.6 billion) in cash in 2024 as bloated inventories, exacerbated by weaker demand in North America, where the company is based, heightened losses.  

In the U.S., and elsewhere, dealers became frustrated with unsold inventory and lackluster sales of staple models such as the Jeep Wagoneer and Ram 1500. Stellantis’ U.S. sales had fallen 17 percent by the third quarter of 2023, trailing competitors General Motors and Ford, which were making a steady comeback.  

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But the board was reportedly also concerned with Tavares’ leadership style, saying he put short-term fixes ahead of the long term for the sake of protecting his reputation. Parting ways, analysts suggest, is driven by deep-seated disagreements between Tavares and the board.  

Thanking Tavares for his role in the merger that created Stellantis (formed by the combination of Fiat Chrysler and PSA in 2021), Chairman Elkann, whose family investment firm EXOR is Stellantis' largest shareholder, said: No public comment had been made by other stakeholders such as the Peugeot family or the French government.  

Union leaders, however, were less charitable. UAW President Shawn Fain accused Tavares of leaving behind "a mess of layoffs and overpriced vehicles sitting on dealership lots," adding that his leadership had failed to fulfill contractual obligations to workers.  

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As Stellantis navigates this leadership vacuum, the automaker faces immense pressure to stabilise operations and rebuild confidence in its North American market. Analysts believe the change offers an opportunity to inject "new ideas and fresh forces" into the struggling company.