Stellantis CEO Tavares resigns amid pricing strategy criticism and market share decline
Stellantis CEO Tavares resigns amid pricing strategy criticism and market share decline
Stellantis CEO Carlos Tavares resigned abruptly Sunday, after criticising his pricing strategy that alienated cost conscious consumers and hurt the automaker's position in its key European market.
Tavares injected a drive for higher operating profit margins, which last year reached a record 13 percent compared to just 7 percent at Volkswagen and Renault, by pricing in a raise and cutting costs. But that's had the effect of turning off customers looking to buy cheap cars especially in Europe where inflation and economic gloom have bitten hard at budgets.
Elena Aragon, 24, a Cádiz, Spain, instructor, is an example of the challenge. Stellantis' Fiat and Peugeot brands too expensive for affordable compact car: She bypasses them for Hyundai. Aragon, who spent €17,000 on a Hyundai i20 with advanced safety features, explained: “The basic models didn't appeal to me, and I didn't like the features on the ones I wanted.”
Stellantis’ mass market brands have suffered a big drop in market share with their rising prices. Fiat’s market penetration in Europe has halved since Tavares took the reins in 2021, falling to 1.8 percent, and Citroën’s share crashed to 2.2 percent, according to ACEA data. Over the course of it, Stellantis has seen its European market share tumble by a third.
Tavares initially won investor hearts with cost synergies after the 2021 merger of Fiat Chrysler and Peugeot owner PSA, but in North America the group hit trouble, with sales tumbling and inventories swelling. Stellantis already rattled investor confidence when it issued a profit warning in September.
Stellantis’s woes culminated Sunday when the automaker said Tavares had resigned, effective immediately. Agnelli family company EXOR investment firm, run by John Elkann, confirmed Elkann will sit on an interim executive committee until a permanent replacement is found.
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Stellantis shares were down 7 percent on Monday morning and hit their lowest level since July 2022. Industry analysts note that the company faces a dual challenge: regaining traction in the competitive European market while addressing its profitability issues in North America.
Tavares had previously indicated plans to retire in 2026, but his early exit reflects growing dissatisfaction with the automaker’s strategy and performance during his tenure.
