By Nick Carey and Enrico Sciacovelli
(Reuters) – The abrupt resignation of Stellantis (NYSE:) CEO Carlos Tavares sent shares in the world’s No. 4 carmaker to more than two-year lows on Monday as investors questioned its turn-around plans.
Tavares’ exit leaves a void at the top of the company as management scrambles to address overcapacity and bloated inventory in the U.S., while global car demand remains sluggish and competition from Chinese rivals intensifies.
A search had already been underway for Tavares, who had been due to step down in early 2026. UBS analyst Patrick Hummel wrote that moving forward the search for a replacement cuts the uncertainty for Stellantis by about six months.
But the “sooner the new CEO is announced, the better,” he wrote.
In the meantime attracting potential investors could prove a challenge “with such volatility in the management team”, JPMorgan analysts wrote in a research note.
Whoever takes over the top job faces a daunting task, with dealers and industry experts saying the sprawling group of 14 brands including Jeep, Fiat (BIT:), Ram, Maserati and Opel has priced itself out of the market in the U.S. and Europe alike.
The carmaker issued a major profit warning at the end of September and ultimately to the downfall of Tavares, previously one of the most respected executives in the auto industry.
In recent weeks a difference in views had emerged among major shareholders, the board and Tavares resulting in the CEO’s resignation, Henri de Castries, a senior independent director on the Stellantis board, said in a statement.
Stellantis said it would establish a new interim executive committee led by Chairman John Elkann and seek a replacement CEO in the first half of 2025.
The next CEO will also have to navigate possible trade spats threatened by U.S. President-elect Donald Trump, while also needing to comply with tougher European CO2 emission standards or face heavy fines.
Stellantis’ shares were down 8.5% by 1125 GMT, on track for their biggest one-day fall since end-September after hitting their lowest point since July 2022.
The stock is down 45% year to date.
CASH (TSX:) BURN
Since its profit warning, investors have worried Stellantis’ forecast for a cash burn of up to 10 billion euros ($10.6 billion) would hurt dividend and share buyback plans.
“Obviously, we have even less visibility now,” Bernstein analyst Stephen Reitman told Reuters.
Analysts and industry experts say that beyond just fixing Stellantis’ more immediate problems, the next CEO will need to assess whether all of its 14 brands, each with their own R&D, marketing and sales teams, have a viable future.
The group’s “problems are very deep and they’re not easily fixed now”, Bernstein’s Reitman said.
Massimo Baggiani, founder at Niche Asset Management, which sold its Stellantis shares in 2023, said although it will take time to fix the automakers’ problems, cost cuts under Tavares have made the company “more efficient and leaner”.
“While we appreciate investors’ anxiety created by a leadership vacuum, the stock valuation already discounts this,” Baggiani said. “We think the company structure can navigate this complicated phase, while looking for a new CEO.”
