Stellantis has announced it is actively searching for a successor to its current CEO, Carlos Tavares, ahead of his contract expiration in January 2026.
The automaker emphasized it’s a routine process. It also confirmed there’s a possibility that Tavares could remain in his role beyond the contract term.
Tavares, who has successfully led Stellantis since its creation in early 2021, has turned it into one of the most profitable automotive groups globally. However, recent challenges in North America have put pressure on him to address the region’s declining sales and profitability.
Addressing North America’s Struggles
The automaker recently unveiled a strategic plan to revitalize its North American operations, which have experienced significant declines in sales and profit, affecting Stellantis’ share price.
The strategy includes reducing bloated vehicle inventories, cutting prices on key models, and implementing aggressive cost-cutting measures.
Natalie Knight, Stellantis’ Chief Financial Officer, spoke at a Bank of America Securities virtual conference. She added outlining the company’s goal to slash 100,000 vehicles from its US inventories by the start of 2024.
The automaker has already made significant progress, reducing around 40,000 units in July and August.
Navigating the Electric Vehicle Transition
Knight emphasized maintaining discipline on pricing and inventory management would be essential for Stellantis to thrive amid the industry’s shift to electric vehicles (EVs).
She said:
“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.”
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Cost-cutting and Supply Chain Optimization
One of the key cost-reduction strategies is to source 80 percent of its supply from low-cost countries by 2028. The move is expected to significantly reduce overall expenses.
Stellantis has also taken measures to cut prices on certain models. These include the Jeep Grand Cherokee and Jeep Compass, to remain competitive in the market.
Stellantis experienced a challenging first half of the year. Adjusted operating profit fell 40 percent. This was primarily due to the poor performance in North America, a critical profit center for the company.
Despite these setbacks, Knight expressed optimism for improvement in the latter half of 2024. She said new models could contribute 15-20 percent of revenues in the second half of this year.
The Long Road Ahead for Stellantis
The search for Tavares’ successor comes at a crucial time for Stellantis as it navigates ongoing challenges in the automotive industry.
Tavares has been instrumental in leading the company through an aggressive cost-cutting strategy. The process of finding a suitable replacement will be complex and lengthy, according to sources close to Stellantis Chair John Elkann.
Driving Toward a Resilient Future
Stellantis’ move to search for a new CEO and implement cost-cutting measures underscores the company’s determination to adapt and thrive amid industry challenges.
By focusing on inventory management, price adjustments, and supply chain optimization, Stellantis aims to strengthen its position in North America and maintain profitability as it navigates the evolving automotive landscape.
