In recent weeks, Tang Weishi, the CEO of Stellantis, the world's fourth-largest automotive company, has faced difficult times.
Multiple reports indicate that Stellantis Chairman John Elkann has begun searching for Tang's successor. It is believed that Tang's contract will expire in early 2026.
In 2021, Tang led the integration of PSA and FCA, resulting in the formation of Stellantis. Under his leadership, Stellantis's financial performance has reached new heights in recent years. In 2023, Stellantis surpassed brands such as Volkswagen, Mercedes-Benz, and BMW, achieving an operating profit of €24 billion and a net profit of €18.6 billion, making it the most profitable automaker in Europe and North America.
Simultaneously, with an annual salary of up to €36.5 million, Tang has become the highest-paid CEO in the European automotive industry.
Why has Tang's situation changed so drastically in less than a year, facing fierce criticism from investors, dealers, and company employees?
The immediate cause relates to disappointing financial performance for the first half of 2024, especially a significant decline in the company's most profitable North American operations. Financial reports indicate that net profit for the first half has fallen by 48% compared to the same period last year. Although overall new vehicle sales saw a 2.4% increase, sales in the U.S. market dropped nearly 16% during the same period.
Analysis suggests that Stellantis's sales difficulties are linked to a lack of financial support for its two core brands, Ram and Jeep, preventing their products from rapidly entering the market. For instance, Ram has not yet launched a mid-size pickup to compete with the Toyota Tacoma, Ford Ranger, and Chevrolet Colorado.
The shrinking market share in North America and high inventory levels have provoked strong dissatisfaction among U.S. dealers. Kevin Farrish, chairman of the Stellantis U.S. dealer council, publicly condemned Tang in a letter on September 10, claiming that Tang's decisions to secure record profits for 2023 have dealt a devastating blow to the U.S. market.
In response, Stellantis has issued a statement addressing this open letter, stating that last month they formulated a series of plans with dealers that are showing some positive results. In August, Stellantis's North American sales increased by 21% month-over-month, market share rose by 0.7 percentage points, and dealer inventories decreased by 42,000 vehicles over two consecutive months, totaling about a 10% reduction.
Stellantis also claims that publicly attacking CEO Tang Weishi is not the most effective way to resolve problems.
In addition to the dealers, tensions are escalating between the United Auto Workers (UAW) and Stellantis. The union's dissatisfaction mainly revolves around product and investment commitments made by Stellantis during last fall's contract negotiations, including plans to move production of the Dodge Durango from the Jefferson North Assembly Plant in Detroit to the Windsor Assembly Plant in Ontario, Canada, as well as Stellantis's decision to delay investment plans in Belvidere, Illinois.
Last year, during negotiations with Stellantis, the UAW also strongly criticized Tang’s high compensation.
At 66 years old, Tang is at the typical retirement age for most European CEOs. So far, however, he has not shown any willingness to retire. After releasing the worst half-year report in history, he canceled his vacation and traveled to the U.S. himself in an attempt to find solutions. He acknowledged making serious mistakes and attributed the issues to his own arrogance.
In a response to the dealers' letter, Stellantis stated that the group has embarked on a path that is bound to lead to success.
However, if the company continues to perform poorly and cannot regain market share, Tang may only be awaiting retirement.
