Stellantis CEO Carlos Tavares gestures during a visit to the Sevel automaker's plant, Europe's largest van-making facility, in Atessa, Italy, earlier this year. — Reuters file
The sudden resignation of Stellantis CEO Carlos Tavares caused the world’s fourth-largest carmaker's shares to plummet to over two-year lows on Monday as investors questioned its turnaround strategies. Tavares’ departure leaves a leadership void as the company struggles to manage overcapacity and excessive inventory in the US, amid sluggish global car demand and intensifying competition from Chinese rivals. A search for Tavares' replacement had already begun, with his planned departure set for early 2026. UBS analyst Patrick Hummel noted that finding a successor would reduce uncertainty for Stellantis by approximately six months, but the sooner a new CEO is announced, the better. Meanwhile, attracting potential investors could be challenging due to the instability in the management team, according to JPMorgan analysts. The next CEO will face a daunting task, as dealers and industry experts suggest that the company’s 14 brands, including Jeep, Fiat, Ram, Maserati, and Opel, have priced themselves out of the market in both the US and Europe. A significant profit warning issued by the carmaker in late September ultimately led to Tavares' downfall, despite his previous reputation as one of the auto industry’s most respected executives. Recent disagreements among major shareholders, the board, and Tavares resulted in his resignation, according to Henri de Castries, a senior independent director on the Stellantis board. Stellantis plans to establish a new interim executive committee led by Chairman John Elkann and seek a replacement CEO in the first half of 2025. The incoming CEO will also need to navigate potential trade disputes threatened by US President-elect Donald Trump and comply with stricter European CO2 emission standards. Stellantis’ shares fell 8.5% by 1125 GMT, marking their largest one-day drop since late September and hitting their lowest point since July 2022. The stock has declined 45% year-to-date. Investors are concerned that Stellantis’ forecast of up to 10 billion euros in cash burn could impact dividend and share buyback plans. Analysts and industry experts believe the next CEO will need to evaluate the long-term viability of all 14 brands, each with their own R&D, marketing, and sales teams. The group’s problems are deep and not easily resolved, according to Bernstein’s Reitman. Massimo Baggiani, founder of Niche Asset Management, which sold its Stellantis shares in 2023, noted that while it will take time to fix the automaker’s issues, Tavares’ cost-cutting measures have made the company more efficient. Baggiani believes the company structure can navigate this challenging phase while searching for a new CEO.
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