Stellantis Begins Search for Carlos Tavares’ Successor

Stellantis is beginning its search for a new CEO to succeed Carlos Tavares, who has held the position since the company’s formation in 2021. Selecting a new CEO is one of the board’s most critical tasks, as it aligns with strategic decision-making for the automaker’s future. Tavares, who helped guide the historic merger between Peugeot Group (PSA) and Fiat Chrysler Automobiles (FCA), is expected to retire at the end of his contract in 2026.

The board, led by Stellantis Chairman John Elkann, has taken steps to ensure a thorough and thoughtful selection process. Tavares will participate in the discussions as a board member, helping the committee headed by Elkann shape the future leadership. “Stellantis continues to take the necessary actions to improve operations in the U.S. market,” spokesperson Ann Marie Fortunate told the Detroit Free Press, emphasizing that the search for a new CEO is part of a broader effort to refine the company’s direction.

Stellantis has faced increasing scrutiny as recent challenges mount, including a significant drop in U.S. sales, high inventories, and ongoing negotiations with unions. Despite these obstacles, the company posted a net profit of $6 billion in the first half of 2024, though down from 2023, which has led to cautious optimism about the need for strong leadership going forward.

David Larcker, a Stanford Graduate School of Business professor, noted that the board’s extended timeframe is both an advantage and a risk. “The time frame is fairly long,” Larcker told the Detroit Free Press, “but it does give the board an opportunity to assess what it wants in its next CEO.” He pointed out, however, that if the timeline stretches too long, it may raise concerns about the quality of governance within Stellantis.

Finding the right fit won’t be easy, Larcker warned. He noted that the Stellantis role requires unique experience, particularly in handling a multinational company with European and American roots. “How many people can run this type of company in the world? It’s probably a really small number of people,” he added.

Erik Gordon, a professor at the University of Michigan’s Ross School of Business, highlighted the potential difficulties for any incoming CEO, particularly with Tavares remaining on the board. Gordon drew a comparison to Disney’s recent CEO transition struggles, saying, “The old CEO is hanging around for a long time, and a CEO candidate will have to worry whether he or she will be going into what Bob Chapek suffered when he took over as CEO of Disney from Bob Iger.”

The Stellantis board may look internally or externally to fill the position, though it’s unlikely to reveal a list of finalists. “If they’re identified, they might get picked off by another company,” Larcker explained. The company’s international footprint will also influence the decision, with cultural considerations given to operations in the U.S., Italy, and France. Due to Stellantis’ presence in Europe and North America, the decision will also likely require consultation with governments and labor unions.

As the process unfolds, all eyes will be on Elkann and the Stellantis board to see who will steer the automaker into its next phase. Given the stakes, Larcker suggests Stellantis’ approach should be thorough and carefully executed: “It’s actually complicated. A well-functioning board would know this and talk about this so hopefully they’re not starting from zero.”

Source: Detroit Free Press