Stellantis begins search for Carlos Tavares successor

Stellantis Chairman John Elkann has started a search for a successor to CEO Carlos Tavares, whose contract runs out in early 2026.

The automaker confirmed the decision in response to questions from Bloomberg News, adding that it's part of regular succession planning.

Pressure on Tavares is rising due to Stellantis' poor performance in markets including the U.S., its biggest single profit pool.

Elkann has no plans for an immediate leadership change and Tavares will be included in the search process, according to people familiar with the matter.

Still, Elkann is increasingly dissatisfied with the situation in North America, where sales have been slowing and several executives left the company, said the people, who asked not to be identified discussing internal matters.

Elkann is also CEO of Exor, the largest shareholder in Stellantis.

Tavares, 66, has pursued a stringent cost-cutting course as Stellantis contends with weakening demand for electric cars and intensifying competition from Chinese manufacturers.

In the U.S., the Jeep and Chrysler maker is struggling with high levels of inventories, quality issues and declining market share. The company's stock has slumped more than a third this year.

Succession planning

It's "normal" for the board to start looking into succession planning given the CEO position's importance, "without this having an impact on future discussions," as there still is the possibility of Tavares staying on longer, a Stellantis spokesperson said. A spokesperson for Exor declined to comment.

Earlier this month, leaders of Stellantis' U.S. dealer network criticized Tavares for presiding over a "rapid degradation" of the automaker's brands that also include Ram and Dodge, urging him to spend more money to clear old inventory off their lots. The company also faces the possibility of more strikes in the U.S. and Italy in coming weeks.

Fixing the U.S. issues will be a "top priority" for Stellantis until the end of this year, Chief Financial Officer Natalie Knight said on Sept. 23, 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.

Selling brands

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.

Tavares has been cutting jobs and slashing capacity at American factories since a plunge in U.S. sales sliced first-half earnings nearly in half. He is 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 U.S. on Oct. 9 and 10 to evaluate plans put in place to turn around the business in the region, the people said.

Tavares 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.

"The economic prospects of the automotive sector require that investments be reviewed with the objective of focusing on those that represent a maximum contribution to customer satisfaction, to the performance of the company without any compromise on compliance with regulations, in particular CO2," the Stellantis spokesperson said.