Stellantis drops as CEO Tavares' resignation brings fresh uncertainty

By Nick Carey and Enrico Sciacovelli

(Reuters) -Stellantis shares slumped as much as 8.9% on Monday to their lowest in more than two years after CEO Carlos Tavares resigned abruptly on Sunday, deepening investors' worries about efforts to turn around the world's No. 4 carmaker.

Tavares' exit leaves a void at the top of the company as management scrambles to get rid of overcapacity and bloated inventory in the U.S., while global car demand remains sluggish and competition from Chinese rivals intensifies.

That sets a challenge for potential investors in a firm "with such volatility in the management team", JPMorgan analysts wrote in a client 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:STLAM ), Ram, Maserati and Opel has priced itself out of the market in the U.S. and Europe alike.

That led to the carmaker issuing 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.

Stellantis (NYSE:STLA ) said it would seek a replacement in the first half of 2025, and would establish a new interim executive committee led by Chairman John Elkann which will be under pressure to find a successor fast.

As Jefferies analysts wrote in a client note, Tavares resignation "leaves the group without leadership at a time of critical decisions" on recovering U.S. market share losses and overcapacity.

The next CEO will also have to navigate the multitude of possible trade spats threatened by U.S. president-elect Donald Trump.

Stellantis' shares were down 7.3% by 0841 GMT, on track for their biggest one-day fall since end-September. The stock, down 45% year-to-date, was the biggest faller among most European peers, with the STOXX 600 autos & parts index down 2.2%.

Since its profit warning, investors have worried that the company's 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 look at 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.

Jefferies analysts wrote that Stellantis' difficulties as a broad brand group are similar to those at Volkswagen (ETR:VOWG_p ), and "continue to cast doubts about the global brand conglomerate business model".

Source: Investing.com