Paris (AFP) – Stellantis chief executive Carlos Tavares on Sunday resigned “with immediate effect,” the auto giant announced, signalling differences over how to confront the group’s profit slump. The Italian-US-French company, whose 14 brands include Fiat, Peugeot-Citroen, Opel, Maserati, Chrysler, Ram, and Jeep, said in a statement that the board had accepted the resignation of the 66-year-old Portuguese executive.
“In recent weeks different views have emerged which have resulted in the board and the CEO coming to today’s decision,” independent director Henri de Castries said in the statement, without giving details. The group said in September that it had started looking for a successor for Tavares, who had been due to stand down when his current five-year contract ends in early 2026.
“The process to appoint the new permanent chief executive officer is well under way, managed by a special committee of the board, and will be concluded within the first half of 2025,” said the statement. It added that an “interim executive committee” led by chairman John Elkann will run the company until then. Stellantis has reported growing difficulties in recent months that Tavares had acknowledged as stormy. Several model launches were delayed because of electrical problems.
Elkann has dismissed any further merger with another group, while Tavares had hinted that the door was open for a deal. A Stellantis earnings report in July said sales in North America, the main profit source, were down 18 percent in the first six months. It later cut its profit forecast and said third-quarter sales in North America were down 20 percent on the 2023 figure. Like other auto groups, Stellantis has blamed competition from China and the difficult transition to electric cars for much of its troubles.
– Cost-cutter cut – Tavares started his career in the car industry with Renault before becoming chief executive of the old Peugeot-Citroen (PSA) group in 2014, where he made his name as a cost-cutter and guided the French group’s merger with Germany’s Opel. A collector of vintage racing cars, Tavares was made chief executive of Stellantis when PSA and Fiat-Chrysler merged in 2021 to form the new group.
At the start, it made impressive profits and invested quickly in electric and hybrid vehicles. A shortage of computer chips meant there were shortages that allowed carmakers to charge high prices. The market has since stabilised at lower prices, and the storm clouds started gathering with this year’s profit figures. In September, Tavares had to abandon his aim of double-digit profit margins for the year that had partly been used to justify his 36.5 million euro ($38.6 million) salary for 2023.
The Stellantis statement confirmed the forecast made in October of profit margins between 5.5% and 7.0% of turnover. Production cuts in several factories worried workers and governments. Thousands staged demonstrations against lower Fiat production in Italy in October. The group has moved to transfer production from Western Europe to cheaper factories in the likes of Turkey, Brazil, and Morocco. Tavares had since given assurances that the situation was improving in the United States and that Stellantis was not alone in facing troubles in Europe.
The group announced last week however that it was closing a factory at Luton in England with the loss of 1,100 jobs. Production has been cut in France, but the company has promised not to close any factories.
© 2024 AFP
