The Stellantis CEO search begins with over a year left on the current boss

Tavares has come under fire from US dealers and the United Auto Workers union after a disastrous financial performance in the first half of the year, when the company was caught off guard with too much inventory at high prices on dealer lots.

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

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

“It is normal for a board to consider 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 is possible that Tavares will stay longer.

Tavares has tried to cut costs by delaying some plant openings, firing union workers and offering buyouts to salaried employees.

The company reported that net profit for the first half of the year was down 48% compared to the same period last year. First-half sales in the U.S. fell nearly 16 percent, even as new vehicle sales rose 2.4 percent.

Increased dealer inventory and high prices drew a rebuke from the head of the US Dealer Council, who asked the company to increase discounts to move vehicles off their lots.

When the company told the auto workers union it would delay plans to reopen a plant and build a new electric vehicle battery factory 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 because of U.S. market conditions.

Tavares told reporters that the global auto industry is caught between consumers seeking more affordable vehicles and demanding more capital spending to develop new gas and electric vehicles.

In North America, Tavares acknowledged that Stellantis has let inventory grow too high and plans to fix that in the first half of the year. Sticker prices, he said, are too high and often send customers fleeing showrooms early in the shopping process, even though discounts are available.

Several American 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 US workers as it deals with the transition from combustion engines to electric vehicles.

In November 2023, the company made buyout and early retirement offers to 6,400 non-union salaried workers. He did not say how many accepted the offers.

The CEO search was first reported Monday by Bloomberg News.