Billionaire Fiat Heir Assumes Control of Jeep and Ram Parent Stellantis After Embattled CEO Carlos Tavares Exits
The reign of Carlos Tavares at Stellantis has come to an abrupt end. Once regarded as a top-tier manager in the legacy car industry, the embattled CEO resigned on Sunday, taking responsibility for a rapid and stunning decline at the parent company of Jeep and Ram.
Stepping in, for the time being, will be board chairman and Fiat heir John Elkann. Stellantis announced that Elkann will lead a newly-formed Interim Executive Committee while continuing his governance and oversight duties, effective immediately, until a permanent CEO is appointed.
“Together we will ensure the continued deployment of the company’s strategy in the long-term interests of Stellantis and all of its stakeholders,” said Elkann, implying a commitment not just to its workforce but also to its struggling U.S. dealers.
The company stated that a special committee of directors is already actively recruiting a permanent replacement for Tavares, suggesting that the decision of his departure was unavoidable due to irreparably damaged trust – a sentiment echoed in the official statement.
“In recent weeks different views have emerged, which have resulted in the board and the CEO coming to today’s decision,” said senior independent director Henri de Castries.
This marks a significant reversal of fortune for Stellantis, which has amassed ownership of over a dozen car brands, including Fiat, Peugeot, and Opel, thanks to two major merger deals over the past decade. Tavares was instrumental in the merger of France’s PSA with Elkann’s Fiat Chrysler Automobiles in 2019.
Earlier this year, the automaker reported record annual results, only to plunge into crisis within months, culminating in an open revolt by its North American dealers, who blamed the company’s recent troubles on the now ex-CEO.
The challenges in the U.S. market are primarily responsible for Stellantis falling two ranks in the global vehicle sales ranking, currently in sixth place this year.
John Elkann, aged 48, descends from the storied lineage of Giovanni Agnelli, who pioneered Italy’s auto industry by establishing Fabbrica Italiana Automobili Torino (FIAT) in 1899 in Turin. No modern Italian dynasty is more akin to royalty than the Agnelli family.
The family history, intertwined with both triumph and tragedy, has often been compared to the Kennedy dynasty. In 1997, a familial tragedy struck with the death of Gianni Agnelli’s nephew from cancer, followed shortly by the passing of Gianni’s only son under mysterious circumstances. The deaths left a void of leadership, later filled by Gianni Agnelli’s younger brother Umberto – though his leadership was brief due to his passing shortly afterward.
Taking up the mantle was Elkann, who joined the Fiat board at age 22 and subsequently steered the family business. Despite his responsibilities, the Agnelli family continued to encounter personal challenges, including a near-fatal overdose suffered by Elkann’s younger brother Lapo in 2005 and a prolonged legal battle over inheritance involving his own mother.
Nevertheless, Elkann boasts the business acumen and experience necessary to navigate this new chapter for Stellantis. Unlike executives such as Elon Musk, who take a hands-on approach, Elkann has historically delegated day-to-day operations to seasoned managers while he focused on his role as CEO of Exor, the family’s investment vehicle aimed at sustaining and diversifying the family wealth portfolio.
Tavares was Elkann’s second pivotal CEO after Sergio Marchionne, who capitalized on Chrysler’s financial troubles to create Fiat Chrysler Automobiles in 2014. Following Marchionne’s untimely death in 2018, the partnership with PSA was established under Tavares’ leadership.
In September, Stellantis surprised the market by moving forward with plans to liquidate its bloated U.S. inventory, triggering a wave of concern. This decision to reduce its forecasted profit margin unveiled underlying issues previously overlooked.
Earlier, dealers criticized Tavares for a short-term strategy that neglected longer-term sustainability, alleging the plan was primarily to enhance 2023 financial results and secure a lucrative $40 million compensation package for Tavares – more than any of his peers in legacy car manufacturing.
Despite these complications, Stellantis hastened to clarify that Tavares would not leave a further entangled situation for Elkann. The company reaffirmed on Monday that it remains on course to meet its adjusted full-year guidance.
This statement, however, did little to reassure investors, as Stellantis shares dropped over 8% in European markets and faced a significant downturn in subsequent New York trading.
John Elkann extended his respect and gratitude to Carlos Tavares for his dedicated service and pivotal role in founding Stellantis, highlighting his successful rejuvenation of both Peugeot and Citroen, and Opel’s revitalization after years of mismanagement under its previous owner, General Motors.
“Our thanks go to Carlos for his years of dedicated service and the role he has played in the creation of Stellantis,” Elkann stated.
