Stellantis, the multinational automotive manufacturing corporation, has announced the commencement of its search for a successor to current CEO Carlos Tavares, while simultaneously unveiling plans to reinvigorate its struggling North American operations. This development comes as the company faces mounting pressure to address declining sales, profits, and share prices in one of its most crucial markets.
The automaker, formed in 2021 through the merger of Fiat Chrysler Automobiles and the PSA Group, stated that the initiation of a CEO search is a standard procedure in anticipation of Tavares’ contract expiring in January 2026. However, the company has not ruled out the possibility of Tavares continuing beyond this date. A source close to Stellantis Chair John Elkann emphasised that the search is not a reaction to recent events but rather a recognition of the complex and time-consuming nature of finding a suitable replacement for such a pivotal role.
Under Tavares’ leadership, Stellantis has become one of the most profitable entities in the automotive industry. Nevertheless, the company’s performance in North America has been a cause for concern, prompting a comprehensive strategy to address these challenges.
Chief Financial Officer Natalie Knight outlined the company’s plan to strengthen its position in the US market during a virtual conference hosted by BofA Securities. A key element of this strategy involves a significant reduction in vehicle inventories. Stellantis aims to cut 100,000 vehicles from its US inventories by the start of 2025, with 40,000 units already reduced in July and August of this year.
Knight emphasised the importance of discipline in pricing and inventory management as crucial components of Stellantis’ strategy to navigate the transition to electric vehicles successfully. “We are living in very difficult times where there are going to be winners and losers, and a lot about being the winner is being the last man standing,” she stated.
The company is also facing potential labour unrest, with the United Auto Workers union in the US preparing for a possible nationwide strike. This adds another layer of complexity to Stellantis’ efforts to turn around its North American operations.
To address these challenges, Stellantis has implemented aggressive cost-cutting measures, including reductions in both salaried and factory workers. The company plans to continue restructuring its business over the coming years, with a particular focus on sourcing 80% of its supplies from low-cost countries by 2028 to significantly reduce overall expenses.
In addition to cost-cutting, Stellantis has taken steps to make its vehicles more competitive in the market. The company has reduced prices on several models, including the popular Jeep Grand Cherokee and Jeep Compass.
While acknowledging the difficulties faced in the first half of the year, Knight expressed optimism about the future. She expects conditions to improve through the end of 2024 and anticipates that sales of new models will contribute 15-20% of revenues in the second half of this year.