Written by Giulio Piovaccari
MILAN/LONDON (Reuters) – Shares of French-Italian automaker Stellantis (NYSE:) resumed their decline on Friday after the automaker said CEO Carlos Tavares would retire in 2026 and announced broad management changes that failed to lift sentiment.
The moves came after the owner of brands including Peugeot (OTC:), Fiat, Jeep and Ram last week cut its 2024 profit forecasts, with cash burn estimated at up to 10 billion euros ($11 billion) this year, and signaled potential cuts. to its dividend and share buyback in 2025.
Tavares told a parliamentary committee in Rome on Friday that EU carbon emissions rules are imposing 40% higher costs on the auto industry at a time when customers are reluctant to buy expensive electric cars, and Chinese electric car rivals enjoy additional cost advantages.
“This creates unbearable tension,” he said.
Milan-listed Stellantis shares fell 2.5 percent by 1515 GMT, their lowest level since July 2022.
Complacency
Management, after years of success, has been slow to adapt to changes in the market, said Fabio Caldato, portfolio manager at AcomeA SGR, which owns Stellantis shares.
“Complacency was their sin,” Caldato said. “They were slow to respond to the deteriorating market landscape. That is why the management reshuffle had to be so profound.”
As part of the reshuffle, Stellantis replaced its chief financial officer Natalie Knight and the head of its North American business, the group’s profit powerhouse but now at the heart of its financial struggles, and gave the job to Jeep brand head Antonio Velosa.
Knight, who took over just over a year ago, was criticized by analysts for widely confirming Stellantis’ full-year forecasts just a week before the earnings warning.
It’s unclear how management changes will reverse trends around Stellantis’ problems rooted in very high prices in North America and high dealer inventories, RBC analyst Tom Narayan said in a note.
“Furthermore, we believe these decisions combined with Mr. Tavares’ retirement in 2026 add further uncertainty to Stellantis’ prospects,” he added.
Chairman John Elkann, the largest single investor in Stellantis through the Agnelli family’s EXOR holding company, said late Thursday that the Stellantis board had unanimously backed Tavares, reducing speculation about the CEO’s premature ouster.
However, AcomeA’s Caldato said Tavares had great results with Stellantis, but now is the time to make a radical change.
“I think the administrative reshuffle should have targeted the commander-in-chief as well,” he said.
Including Friday’s move, Milan-listed shares are down about 45% year to date, lagging their European rivals.
“We believe things may get worse before they get better,” brokerage firm Banca Akros said in a note.
Tavares on Friday also denied plans to sell facilities in Italy, especially to Chinese rivals, because they would help the group fuel future demand for electric cars.
“We need them all,” he told Italian lawmakers.
Confirmation of Tavares’ retirement plans came shortly after Stellantis announced he may stay on after his contract expires. The world’s fourth-largest automaker by sales said it now plans to name his successor by the fourth quarter of 2025.
Analysts at JPM said the change provides visibility in terms of management structure and a clear commitment to finding a successor to Carlos Tavares.
Tavares, an avid race car driver who was widely touted in previous years for making Stellantis one of the world’s most profitable automakers, has led the company since its inception through the 2021 merger of Fiat-Chrysler and Peugeot manufacturer PSA, where He was a member of the Board of Directors. Chair since 2014.
($1 = 0.9132 euros)