Auto giant starts looking for a new boss with over a year left on the current CEO’s contract

Tavares has been under fire from U.S. dealers and the United Auto Workers union after a dismal first-half financial performance when the company was caught off guard with too much high-priced inventory on dealer lots.

As head of PSA Peugeot, Tavares took control of the Netherlands-based company in January of 2021 when it merged with Fiat Chrysler Automobiles. Its North American operations had been the company’s main source of profits, but have struggled this year amid larger market changes.

In a statement Monday, Stellantis said Tavares’ five-year contract is a little over a year from its expiration date in 2026.

“It is normal for a board to look into the subject with the necessary anticipation given the importance of the position, without this having an impact on future discussions,” the statement said.

The company added that it’s possible Tavares will stay on longer.

Tavares has been trying to cut costs, delaying some factory openings, laying off union workers and offering buyouts to salaried employees.

The company reported that first-half net profits were down 48% compared with the same period last year. First-half sales in the U.S. were down nearly 16%, even though overall new vehicle sales rose 2.4%.

Growing dealer inventory and high prices brought a rebuke from the head of the U.S. dealers council, who called on the company to boost discounts to move vehicles off of their lots.

When the company told the auto workers union that it would delay plans to reopen a factory and build a new electric vehicle battery plant in Belvidere, Illinois, UAW President Shawn Fain called for Tavares to be fired.

The union has filed grievances and threatened to strike over the delays, which the company says are necessary due to market conditions in the U.S. Fain blamed the problem on poor leadership from Tavares and said General Motors and Ford are still performing well.

Tavares told reporters that the global auto industry is caught between consumers looking for more affordable vehicles and demands for more capital spending to develop new electric and gas-powered vehicles.

In North America, Tavares conceded that Stellantis let inventory get too high, and plans to fix that in the first half didn’t work. Sticker prices, he said, are too lofty and often send customers fleeing from showrooms early in the shopping process even though discounts are available.

Several U.S. executives, including the heads of the Jeep, Dodge and Ram brands, have left the company in recent months.

In March, the company said it would lay off 400 white-collar workers in the U.S. as it deals with the transition from combustion engines to electric vehicles.

In November of 2023 the company made buyout and early retirement offersto 6,400 nonunion salaried workers. It has not said how many took the offers.

The CEO search was first reported Monday by Bloomberg News.