The newly created car manufacturer, Stellantis’ chief executive, Carlos Tavares, resigned Sunday after growing differences between him and the board of directors. His resignation is coming at a time when the company is facing hard times in most of its markets, particularly in the U.S. market where the sales have dropped drastically. The company accepted Tavares’ resignation and began the search for a new chief executive that it expected to conclude by mid-2025. Meanwhile, the firm will create a new executive committee headed by Chairman John Elkann. 

Tavares’ departure is not the best time for Stellantis, which has faced a series of operational issues, mainly in North America, its cash cow. The company witnessed its sales plummeting. For example, net revenue decreased 27% in the third quarter of 2024. In addition to this, the company reduced its financial guidance for the year, citing a 20% decline in global vehicle sales from last year. It has been an uphill battle, as Tavares and others have tried to call attention to past mistakes in operations, but U.S. operations continue to underperform. Analysts are blaming management for mishandling the U.S. strategy, including a lack of investment into new or updated products and concentrating too much on cost-cutting measures, which have been straining the business. 

Tavares, 66, had been with Stellantis since its inception in 2021 following the merger of Fiat Chrysler and PSA Group. He had been praised for the successful merger and having increased the profitability of Stellantis. However, this year, his management strategies, including deep cost cuts and restructuring efforts, have drawn criticism from both employers and unions, particularly the United Auto Workers (UAW). The union opposed the Tavares leadership, criticizing him for reckless management of the company, and welcomed his resignation. 

Another area of criticism is cost-cutting measures taken by the carmaker, such as massive layoffs of the workforce. From 2019 to 2023, Stellantis has reduced its global workforce by 15.5%, or about 47,500 employees. Additional layoffs and production cuts were made in 2024. The measures are intended to help the company improve profitability, but have raised tension with labor unions and have been criticized concerning U.S. operations. This leaves Stellantis at a crucial stage in leadership transition, though it faces major challenges in its core markets.