Stellatis Takes More Flak, Allegedly Searching For New CEO

Stellantis is reportedly seeking a replacement for Chief Executive Officer Carlos Tavares after the CEO was targeted by the National Dealer Council and United Automobile Workers (UAW). However, it doesn’t sound like Tavares will be getting booted out the door abruptly with Stellantis Chairman John Elkann allegedly fine with just letting his contract expire in 2026. Regardless, there’s a lot of pressure mounting against the automaker — both internally and externally — and it’s the CEO that typically takes the fall.

Stellantis’ US dealer network has turned on the brand, faulting Tavares for allowing many of the Chrysler legacy brands to wither on the vine. To be fair, most of those brands didn’t seem to have much of a long-term strategy when the automaker was still known as Fiat Chrysler Automobiles (FCA). But Stellantis hasn’t done much to change that trajectory, with leadership prioritizing downsizing and electrification.

The end result has been a declining market share for brands like Dodge, Chrysler, Ram, and even Jeep. Retailers now have too much inventory with lots becoming bloated with older products they cannot sell. Stellantis brands have some of the largest vehicle oversupply issues in the industry right now. Dealers are also annoyed that newer models don’t appear to be resonating with the public and that there have been perceived lapses in quality control across the board — something more than a few automakers have struggled with in recent years.

Meanwhile, the UAW is upset that Stellantis is downsizing in the United States and has accused the automaker of making changes to established investments that would violate the contract they’ve negotiated. Layoffs aren’t popular with the union and members look like they could be gearing up to strike again after Warren, Michigan, sees job losses associated with the demise of the Ram 1500 Classic.

The issue has even drawn the attention of several Republican members of Michigan's congressional delegation, who sent a letter to Tavares expressing concerns that the brand was seeing so many layoffs within the state. While the UAW leadership rarely endorses anyone that isn’t a Democrat, they’re presently seeing a lot of indirect support from Michigan Republicans who share their concerns about domestic employment and the speculative outsourcing of Ram truck overflow (which was assumed to go to Sterling Heights Assembly) to Mexico. Though it would be hard to call them true allies, as the document faults emission policies put forward by the Biden-Harris administration (which UAW President Shawn Fain endorsed) at least as much as it does Stellantis’ leadership.

"These jobs are not just part of Michigan’s heritage; they are the backbone of our economy. Furthermore, our auto industry is crucial for suppliers and dealers who are already facing layoffs and other unsustainable cost pressures," the lawmakers stated in their letter.

"The recent tailpipe emissions standard rule from the Biden-Harris Administration’s Environmental Protection Agency (EPA) threatens to exacerbate Michigan’s economic decline," continues the document, before urging Stellantis to push back on “federal overreach by activists in the EPA who would decimate America’s ability to compete and Americans ability to earn a living.”

Stellantis has pushed back against the allegations made against it by the UAW. Chief Operating Officer Carlos Zarlenga has said CEO Tevares has reached out to the union to work through issues during a period of market volatility and has taken exception in regard to the UAW stating that the automaker had violated its contract. Meanwhile, UAW President Fain has claimed the union had been asking for weeks to meet with Tavares as it filed formal grievances with the National Labor Relations Board.

However, from this vantage, it appears that both sides are now waging a public relations battle. There’s just too much he-said-she-said taking place. Your author was likewise under the impression that Stellantis was never terribly interested in maintaining the historically American brands it acquired via the PSA-FCA merger. In the past, Stellantis leadership has expressed an interest in returning French brands to the North American market while suggesting that Dodge and Chrysler would need to prove themselves as viable if they were to stick around in the long term.

The only other takeaway from the merger is that it resulted in a far-larger company that could perhaps be better at coping with the massive technological shift (e.g. electrification, vehicular connectivity) the industry seems convinced is inevitable.

However, Stellantis cannot simply ignore the problems it’s confronting and is allegedly eager to solve problems on both the U.S. and Italian markets — according to Bloomberg:

Fixing the US issues will be a “top priority” for Stellantis until the end of this year, Chief Financial Officer Natalie Knight said late Monday, adding that the company is working hard to find solutions that satisfy all stakeholders, including dealers. Stellantis recently pledged to invest more than $406 million in three Michigan sites.

Still, Tavares has been demanding additional budget cuts to protect profitability, stoking worries that his aggressive efficiency push may ultimately endanger longer-term projects and revenue flows, the people said.

The CEO has been cutting jobs and slashing capacity at American factories since a plunge in US sales sliced first-half earnings nearly in half. He’s selling more assets and floated the possibility of shedding one or more of the group’s 14 brands to protect profits.

Stellantis’ board of directors is due to meet in the US on Oct. 9 and 10 to evaluate plans put in place to turn around the business in the region, the people said.

The CEO won praise for his efficiency drive in the years following the 2021 merger of Fiat Chrysler and France’s PSA because it made the group leaner, bolstering returns. In the months following the pandemic, Stellantis benefited from pent-up demand and high vehicle prices, with the shares peaking six months ago. In July, the automaker reported a 48 [percent] slump in first-half net income.

Stellantis has asserted that it has a lot of balls to juggle right now. Market conditions could certainly be better, supplier issues have persisted, customer satisfaction of vehicles has been waning industry wide, and companies are attempting to contend with aggressive emission protocols from Western governments when EVs aren’t selling that well. The company has to take all of the above into consideration while it reviews its investments.

"There is indisputable volatility in the market, especially as the industry transitions to an electrified future. Many automakers are revising their plans," Stellantis spokesperson Jodi Tinson said in a press release this week.

But knowing that isn’t like to appease concerned union members or dealers. Layoffs are never going to be a win with local communities or the UAW and bloated inventories are every dealership’s worst nightmare. As of now, Stellantis looks to be on course to lay off up to 2,450 workers at its Warren Truck Assembly Plant (responsible for Wagoneer models) and is rumored to be considering moving more truck production to Mexico. In Stellantis’ defense, Tavares has suggested that some U.S. plants are seeing too many defects that require fixing before a vehicle leaves the facility, sometimes delaying shipments or resulting in quality control issues.

As for Tavares, Stellantis has confirmed nothing about his alleged replacement. But CEOs typically are the ones to take the hit publicly whenever an automaker under-performs. Numerous outlets have cited inside sources as stating that Chairman Elkann is underwhelmed with how things have been progressing inside North America and that the company is presently hunting for a new CEO with Tavares even participating in the search. It sounds like he may be able to run out his contract and simply retire in 2026. But we wouldn’t be surprised to see an early departure if public pressure against the automaker doesn’t dissipate over the next several months.

[Images: Stellantis]

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