Stellantis, the multinational automotive corporation known for its iconic brands such as Chrysler, Jeep, Fiat, and Peugeot, has recently announced the departure of its CEO, Carlos Tavares. His resignation comes amidst a backdrop of contentious boardroom disagreements and a significant downturn in the company's sales performance. The move follows a period of plummeting sales figures, an overabundance of unsold inventory at dealerships, and workforce reductions across several manufacturing facilities. Additionally, there have been vocal calls for his resignation from the United Auto Workers union, which represents Stellantis' US workforce, as well as harsh critiques of his leadership from a council representing the company's US dealers.

According to a statement from Henri de Castries, Stellantis' Senior Independent Director, Tavares' resignation was prompted by "different views" he held compared to the board of directors. Tavares, a 66-year-old Portuguese businessman, played a pivotal role in the merger that united the French automaker PSA Group, known for Peugeot, with the European-American automaker Fiat-Chrysler, resulting in the formation of Stellantis. This new entity now stands as the world's fourth-largest automaker, trailing only Toyota, Volkswagen Group, and Hyundai Motor Group. Prior to the merger, Tavares served as the chairman of PSA Group, and the merger was finalized in January 2021.

Earlier in the year, it was disclosed that Tavares was expected to retire at the conclusion of his contract in early 2026. The company has now initiated a process to identify a new permanent Chief Executive Officer, which is being managed by a Special Committee of the Board with the aim of finalizing the appointment within the first half of 2025. In the interim, a new Interim Executive Committee, chaired by John Elkann, will be established to oversee operations.

The decision for Tavares to step down coincides with a period of high vehicle prices in North America, which have negatively impacted sales and alienated the company's traditional customer base. Global sales volume for the first six months of this year decreased by 10%, and in the third quarter, there was a dramatic drop of 20%. In the United States, sales have plummeted by 17% over the first nine months of the year. Industry experts have noted that the average price of vehicles from Jeep, Ram, Dodge, and Chrysler brands has become prohibitively expensive for the core demographic of these brands. By the end of the third quarter in 2023, the average Stellantis vehicle sold in the United States was priced at $58,000, according to data from the automotive website Edmunds. Although the average price in the US has since decreased, it remains the second-highest in the industry, just under $55,000 as of the third quarter.

The company has had to lay off approximately 1,200 workers at its truck plant in Warren, Michigan, which coincided with the discontinuation of the entry-level Ram 1500 Classic pickup. The elimination of a shift at this plant became effective in October. In November, Stellantis announced plans to reduce one of the two shifts at its Toledo Assembly Complex South plant, which manufactures the Jeep Gladiator pickup, resulting in the indefinite layoff of about 1,100 workers. These layoffs, along with the company's slow response in rehiring workers at a closed plant in Belvidere, Illinois, have led the union to threaten a new strike against Stellantis. The UAW has accused Stellantis of not adhering to the terms of the contract that was reached after strikes against the automaker a year ago. Stellantis has denied any breach of contract and has pledged to challenge the legality of any new strike.

The robust profits in 2023 resulted in Stellantis paying Tavares a total compensation of 36.5 million euros, which equates to $36.8 million at the current exchange rate. This compensation package has sparked significant criticism. The UAW released a statement welcoming Tavares' resignation, describing it as a major step in the right direction for a company that has been mismanaged and a workforce that has been mistreated for too long. They expressed pleasure in seeing the company respond to pressure and correct its course.

In August, Kevin Farrish, the chairman of the company's US dealers' council, which represents the independent businesses selling Stellantis vehicles, wrote a letter attributing many of the company's problems to decisions made by Tavares. Farrish claimed that Tavares focused too much on increasing profit margins and executive compensation, while neglecting to produce vehicles at competitive prices. "In 2023, you engineered a record year of profitability for Stellantis, earning you the title of the highest-compensated automotive CEO," Farrish wrote in the letter. "The reckless short-term decision-making to secure record profits in 2023 has had devastating, yet entirely predictable, consequences in the US market." Farrish pointed to plant closing announcements and the loss of US market share among other issues. While Farrish noted last month that steps taken by Stellantis to reshuffle its executive ranks and offer incentives to vehicle buyers had mitigated some of the most severe problems, he still harbored concerns about the company's direction. Farrish has not yet commented on Tavares' departure.

In October, Stellantis revised its 2024 profit forecast downward due to declining earnings and sales. The company confirmed on Sunday that it maintains its reduced earnings forecast for the year.