Struggling Jeep and Ram maker Stellantis is in search of a new CEO to succeed Carlos Tavares, as part of a normal leadership succession plan. Tavares has faced criticism from U.S. dealers and the United Auto Workers union after a poor financial performance in the first half of the year. The company, formed from the merger of PSA Peugeot and Fiat Chrysler Automobiles, has been dealing with challenges in its North American operations, which were previously a major source of profits. Tavares’ contract is set to expire in 2026, but the company is considering his replacement as part of its long-term planning.
The company has confirmed that it is actively searching for a new CEO, indicating that a deal may have been reached for Tavares to step down. Erik Gordon, a business and law professor at the University of Michigan, believes that the decision to change leadership is aimed at benefiting the company. Stellantis has been facing difficulties in the U.S. market, with first-half profits down by 48% compared to the previous year. Sales in the U.S. have also declined despite an overall increase in new vehicle sales. Challenges such as growing dealer inventory and high prices have prompted calls for changes in leadership to address these issues.
Tavares has been implementing cost-cutting measures, including delaying factory openings, laying off union workers, and offering buyouts to salaried employees. The company’s decision to delay plans to reopen a factory and build a new electric vehicle battery plant in Illinois has faced criticism from the UAW. The union has called for Tavares to be fired, blaming poor leadership for the company’s struggles. Stellantis has acknowledged the need to reduce inventory and has been working with dealers to achieve this goal, which has resulted in an increase in sales in August.
The Chief Financial Officer of Stellantis, Natalie Knight, has expressed satisfaction with the progress made in reducing inventory on dealer lots. The company aims to further reduce its inventory by 100,000 vehicles by the beginning of next year. Tavares has acknowledged that inventory levels were too high in North America, leading to high sticker prices that deter customers. The company is facing challenges in transitioning from combustion engines to electric vehicles, leading to layoffs and restructuring efforts. The CEO search was first reported by Bloomberg News, indicating a significant change in leadership at Stellantis.
