Revenue and profit both decline, CEO suddenly resigns, global fourth-largest automaker Stellantis's US stock plummets 8% in pre-market trading

The roof leaks just as the rain falls at night. Stellantis, the world's fourth-largest automaker, reported a disastrous performance in the third quarter, and CEO Carlos Tavares suddenly announced his resignation. What path should Stellantis take in the future?

On Monday, pre-market trading saw Stellantis drop by 8%. So far this year, Stellantis's stock price has fallen by nearly 43%.

In a statement on Sunday, Stellantis announced that the company's board accepted Tavares's resignation but did not explain the specific reasons for his departure. As early as September this year, Stellantis began searching for Tavares's successor, stating:

“The process of appointing a new CEO will be completed in the first half of 2025. In the meantime, the company will establish a new interim executive committee.”

Tavares was originally expected to complete his term as CEO until early 2026. He joined the Peugeot-Citroën Group in 2014 and successfully rescued it from the brink of bankruptcy, later acquiring German Opel to create Stellantis. In 2021, Stellantis completed its merger with Fiat-Chrysler.

Henri de Castries, an independent senior director at Stellantis, stated that in recent weeks, differing views among the company's shareholders, board, and CEO led to today's decision.

According to sources cited by the Financial Times, the sharp 27% decline in net revenue due to falling sales in the U.S. and Europe further exacerbated tensions between Tavares and other board members, leading to disagreements on how to get the company back on track.

In the third quarter, Stellantis reported net revenue of €33 billion, a 27% year-on-year decline, with shipments of 1,148,000 units, down 279,000 units from the same period last year, a 20% year-on-year decrease.

Insiders indicated that Tavares was too focused on short-term gains rather than the group's long-term development, which angered everyone in the process. Others noted that relationships within Stellantis and with stakeholders, including U.S. suppliers and dealers, had become tense, with disgruntled factory workers in Italy and the U.S. threatening to strike after production cuts.

In July, Tavares downplayed Stellantis's poor performance, stating that the decline in sales was merely "a small bump in the road" and vowed to "fix" these issues. In the first half of the year, Stellantis achieved net revenue of €85.017 billion, a 14% year-on-year decline, with net profit of €5.647 billion, down 48% year-on-year.

Previously, Stellantis had built a strong balance sheet through large-scale cost reductions and issued a profit warning in September. The company then stated that free cash flow for 2024 would be negative, ranging from €5 billion to €10 billion This Sunday, Stellantis confirmed its financial guidance for 2024, including an adjusted operating profit margin target of 5.5% to 7%. The company stated that its market share in the U.S. is increasing and is expected to resolve the high inventory issue in North America by the end of the year.