The Stellantis (STLA) 2024 roller coaster hit a new low with CEO Carlos Tavares’s abrupt resignation on Sunday.
Stellantis’ senior independent director Henri de Castries said in a statement that “in recent weeks different views have emerged,” which have resulted in the board and Tavares parting ways.
“Speculation is likely to be rife as to what has happened, but it was already known that Tavares would resign in 2026 at the end of his contract and a search for his successor was underway. That leaves the main question — why now?” HSBC analyst Mike Tyndall wrote in a short note Monday morning.
Wedbush analyst Dan Ives was also caught by surprise: “This is another black eye moment for Stellantis and the timing comes as a shocker,” he told Yahoo Finance. “It speaks to the hurricane-like headwinds Stellantis has heading into 2025 and a change at the top was needed to move forward.”
Stellantis, which counts Dodge, Ram, Jeep, and Fiat among its brands, saw its stock slide on news of the departure, which came as a shock to the industry and Wall Street.
Last month the company announced the departure of its CFO and warned profits would be hit by a variety of issues, such as weakening demand and bloated inventories, leading to heavy discounting.
The board said the new CEO search was well underway and a replacement would be announced in the first half of next year. Here are three areas a new CEO must address to right the ship at Stellantis.
Tavares, who engineered the merger of FCA (Fiat Chrysler Automobiles) and France’s PSA Group to create Stellantis, was wholly aware of the biggest issues facing the brand.
The automaker posted global shipments of 1.148 million, down 20% versus a year ago. Stellantis said its shipments were not where the company expected to be and said the decline was due to production gaps between new and old models, planned North American inventory reductions, and “challenging” European market conditions.
However, the company said last month that it reduced total inventory by 129,000 vehicles, including an 80,000-unit reduction in North America, which moved toward its goal of a 100,000-unit reduction by the end of November.
The question is whether Tavares was moving quickly enough. HSBC’s Tyndall speculated that might be the case.
Regardless of who’s in charge, the turnaround of Stellantis’ bloated inventories still needs to be addressed, as it is creating downward pressure on prices.
Auto research and online marketplace Cars.com found in its latest report that Stellantis saw average list prices fall across all its brands, with Jeep down 5%, Ram down 7%, and Dodge falling 3%. All three brands were below average on the Cars.com New Car Price Index (NCPI), which estimates the full cost to buy and finance a vehicle.
Tavares’s replacement will have to continue trimming inventories and, at the same time, start raising prices back to levels that can get margins and profits moving in the right direction.
While Jeep and Ram have seen sales surge in recent years, the other stablemates in the Stellantis portfolio have struggled.
Dodge retired its long-in-the-tooth muscle cars like the Challenger and the Charger last year and now only has two vehicles on sale in the US, the Durango SUV and Hornet crossover, which itself is a rebadged Alfa Romeo Tonale.
Chrysler only has one product on offer, the Pacifica minivan, which will see a cheaper minivan variant called the Voyager coming in 2025.
While Dodge has the new Daytona Charger EV (and gas-powered variant) on the way, that might not be enough. Ram will see the new electric Ram REV and hybrid range extender versions come out next year, later than expected.
Analysts say the company needs to get its newer vehicles to dealers sooner to refresh aging vehicles and add more to the product mix.
“They have to look at every model that’s coming out in terms of where they’re looking to invest, the EV strategy, the cost structure. Do all the assets make sense? I think all options are on the table,” said Wedbush analyst Ives.
Some brands may not be worth saving — at least in the US. Luxury brand Maserati may be one of them. Through the first nine months of the year, Maserati sales have plummeted 60% compared to a year ago. While Stellantis says it is committed to the brand, it may end up selling Maserati off to the highest bidder.
Last year, the Big Three — Ford, GM, and Stellantis — signed landmark labor deals with the United Auto Workers (UAW), with new four-year contracts in place. While labor stability was seen as the end result, this hasn’t been the case for Stellantis.
The UAW is threatening new strikes at Stellantis plants due to Stellantis’ perceived reneging on its deal with the union. In particular, the UAW said Stellantis violated its agreements in reopening its Belvidere, Ill., plant, which was due for upcoming projects including an auto parts hub coming this year, a stamping plant next year, and an assembly plant in 2027.
The UAW says these projects are in limbo as a result of Stellantis’ non-action. Meanwhile, Stellantis says the UAW can’t expect everything in a four-year contract to happen right away.
Stellantis also cut production at its Toledo assembly plant down to one shift and has cut production elsewhere due its need to reduce inventory, leading to permanent layoffs of thousands of UAW members.
The UAW says these moves run counter to its collective bargaining agreement and can’t be done without remedial measures. Not surprisingly, UAW leadership isn’t sad to see Tavares go.
“[Tavares’s resignation was a] major step in the right direction for a company that has been mismanaged and a workforce that has been mistreated for too long,” UAW president Shawn Fain said in a statement to Yahoo Finance.
“We look forward to new Stellantis leadership that respects hardworking UAW members and is ready to keep its promise to America by investing in the people who build its products,” Fain added.
A new CEO will have to forge a less contentious relationship with the UAW and be more transparent regarding changes at its assembly plants and the impact on financial commitments to workers who have been affected by production cuts.
Whoever steps into the permanent CEO role will have to address these three issues head-on.
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on X and on Instagram.
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