Just nine months ago, Carlos Tavares looked like one of the most unlikely executives in the auto business.
The former head of Stellantis – who resigned suddenly on Sunday – has seen another rewarding year at the world’s fourth-largest carmaker.
This was probably the reason for the reduction in prices, after the Portuguese official in 2021 planned the merger of Fiat Chrysler and PSA Group to create a Frankenstein monster.
But behind the greatness of Stellantis, problems are beginning which have brought the reign of Tavares to a surprising halt. They threaten to give nightmares to his successor.
Among them is the question of whether Stellantis, the global behemoth that owns 14 brands including Vauxhall, Fiat, Peugeot and Jeep, can continue as a giant, analysts said on Monday.
At the same time, the CEO’s death is the latest sign of the turmoil gripping the European car industry as the Chinese compete in their markets around the world.
The personality that won Carlos Tavares praise at the height of his powers is now being blamed for his downfall as head of Stellantis – Benoit Tessier/Reuters
“The situation is very difficult, not only for Stellantis but for all Western car manufacturers,” says Felipe Munoz, automotive industry analyst at Jato Dynamics.
“Tavares’ policy of reducing prices worked up to a point, when there was not much pressure from China.
“But what we’re seeing is that this strategy has its limits.”
An engineer by training and a busy racing car, Tavares has earned a reputation among investors for managing capital and delivering double-digit profits no matter what.
He rose through the ranks at Renault – where he started as a test car driver – and Nissan, before taking over as CEO of PSA Group in 2014, the French giant best known for Peugeot and Citroen.
There, he oversaw the dramatic transformation and takeover of the Opel and Vauxhall brands from General Motors in 2017.
But his masterstroke followed six years later, when he agreed a mega-merger with Fiat Chrysler, the Italian car giant controlled by the powerful Agnelli family.
Three years of record profits followed, as he refinanced and brought in more money than most investors expected. It seemed typical of Tavares.
“Carlos is probably the smartest guy I’ve ever worked with,” says Andy Palmer, a former Nissan executive who worked with Tavares at the Japanese company.
“The way he knows cars is amazing, he is a product man. But he also has a keen understanding of finance and business, so it’s a rare talent.
“I wouldn’t say he’s ruthless, but sometimes he can look like a cold fish – and that allowed him to do things.”
As with many leaders, however, Tavares’ lauded personality has been blamed for his downfall.
In July, it became clear that Stellantis was in deep trouble when the company revealed half-year profits had fallen from €10.9bn (£9.1bn) to €5.6bn.
Even worse, most of the problems seemed to have their genesis in the difficult love path of the super-hero. Critics have complained of product stagnation, high prices, quality issues and declining market shares across the region.
In Europe and Turkey, the company’s share has plunged from 22.3pc to 19.3pc since 2020, according to Jato Dynamics, with its share in North America falling from 12.4pc to 9.7pc.
In China, the small share of 0.5pc has decreased to 0.3pc during the same period. The only bright spot is in the Middle East and Africa, where it rose from 3.7pc to 4pc.
Tavares, who said he was humbled by July’s numbers, put the problems down “on the street” and immediately began to correct the leaders and try to establish a strict discipline – showing that he intended to stick.
But the poor results were followed by a profit warning in September which wiped 50pc of value from Stellantis shares. Then the company announced in October that Tavares would step down in early 2026.
By Sunday evening, the CEO’s fate was sealed as the company confirmed his departure amid differences reported by the board over future plans.
On Monday, insiders said Tavares was moving “too fast to capitalize on his popularity”, and was too focused on the short term, managing to “upset everyone in the process,” according to the Financial Times.
Industry experts have also pointed out that there are many controversies that have been made by the CEO around the world.
In Italy, Stellantis has been in a war of words with the government of Georgia Meloni over the company’s decision to transfer production of Alfa Romeo cars to Poland.
Officials in Meloni’s management accused the company of trying to mislead customers with the “Italian sounding” name of the Milano to another country-made SUV model, which was later called the Junior.
The row has become a thorn in the side of John Elkann, the head of the Agnelli family, who has also found himself publicly criticized. Elkann personally notified Meloni of Tavares’ resignation, according to Bloomberg.
Elsewhere, Stellantis has been highly critical of the sale of electric vehicles in the UK and recently announced the closure of its van factory in Luton.
And in North America – traditionally its largest market – Tavares was accused by dealers and unions of leaving brands including Chrysler, Dodge, Jeep and Ram in an “anemic and low state” following mass layoffs, production cuts, rows with distributors and administrative issues. .
In September, Stellantis was forced to recall 194,000 hybrid Jeep SUVs to address fire hazards involving the battery compartment.
On top of all this, Stellantis, like competitors such as Renault and Volkswagen, is fighting for the market around the world, with expensive Chinese brands running ahead in the electric vehicle (EV) segment.
“Carlos was attacked in Italy because the company was considered the best in France. Then he was attacked by the Americans, and Jeep failed. So he suffered a lot with political and ownership issues,” says Palmer.
Many now think that Stellantis will struggle to revive itself as it struggles with the weight of many marques – not the same market share as Citroen and Fiat.
The evolution of EVs is forcing automakers who have spent decades manufacturing and outsourcing their supply chains to bring production back in-house, while different regulatory approaches in China, Europe and the US – where Donald Trump is ready to tear down Joe Biden’s EV. mandate – are creating more problems.
Also, many European companies simply cannot compete with their Chinese affiliates on production costs.
This is why Volkswagen is experiencing a painful shake-up that could see it lay off tens of thousands of workers and close factories in Germany for the first time.
Based on this situation, says Jato’s Munoz, whoever takes over from Tavares is bound to look to close or weave some of the brands in the Stellantis tent.
“I expected him to do what Stellantis did when he was first created,” Munoz adds. “Because you know, 14 brands is too many, especially when most of them are direct competitors.
“There is no room for more now, because the markets are full and we have the Chinese coming.”
One analyst agrees, saying: “They paid the money but they failed to understand the quality.
“How can you lose such a large market when you have so many brands? You’re not behaving well.”
Ultimately, Munoz says, Tavares’ greatest legacy will be the creation of Stellantis — even if it survives the next phase of the company’s struggles.
“I think a big decision will have to be made soon,” Munoz adds.
Nine months ago, it was a safe bet that Tavares would be the man to produce. Now, someone will be trying to keep the monster he created under control.
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