DaimlerChrysler CEO Schrempp to step down

28th July 2005, Comments 0 comments

28 July 2005, STUTTGART - DaimlerChrysler chief Juergen Schrempp will step down from the transatlantic car giant at the end of this year, the company said Thursday in news which sent the firm's stocks surging 8 per cent on the stock market.

28 July 2005

STUTTGART - DaimlerChrysler chief Juergen Schrempp will step down from the transatlantic car giant at the end of this year, the company said Thursday in news which sent the firm's stocks surging 8 per cent on the stock market.

He will be replaced by Dieter Zetsche, 52, head of the Stuttgart- based company's North American operations, a spokesperson said, adding that the new chief of Chrysler in the U.S. will be an American, Thomas LaSorda.

Zetsche, who Schrempp nominated as his successor, is credited with having successfully steered the once-loss making north American operation to a turnaround. LaSorda, 51, is Chrysler's operating chief.

The stock exchange marked the news of Schrempp's departure by sending the company's shares up more than eight per cent to almost EUR 40.

The 60-year-old Schrempp had long been under fire from analysts over the results of his push to transform DaimlerChrysler into a global carmaker based in the world's big three auto markets - Asia, Europe and the United States.

His decision to leave one of the most prestigious jobs in German industry comes as DaimlerChrysler reported a 28 per cent rise in second-quarter profit over the same period last year to EUR 737 million.

"The supervisory board and Professor Schrempp are in full agreement that the end of the year 2005 is the optimal time for a change in the leadership of the company," supervisory board chairman Hilmar Kopper said. Schrempp's contract was only recently extended to 2008.

In a sense, the latest results allow Schrempp to bow out as head of the world's fifth-biggest carmaker on something of a high note with a pickup at the group's flagship Mercedes-Benz group helping to bolster second-quarter earnings.

The luxury Mercedes car group posted a modest EUR 12 million profit - a turnaround over the first quarter where its losses were almost EUR 1 billion.

Sales were up for the second quarter by 4 per cent to EUR 38.4 billion, the company said.

Despite the modest set of earnings booked by Mercedes in the second-quarter, the results are a further sign that the luxury car brand is now on the road to recovery after intense global competition, a strong euro, high oil prices and a string of damaging quality reports sent the auto maker's sales into reverse.

Mercedes also suffered as Daimler's focus switched more and more to Detroit to try to overcome the cut-throat competition of the U.S. car market and to haul its Chrysler business back into the black.

Having started his career in the car industry as a truck mechanic, Schrempp emerged as DaimlerChrysler's chief in 1995.

He first set about restructuring the group before launching the USD 36 million merger with Detroit-based Chrysler in November 1998.

But the "marriage of equals", as Schrempp liked to call it, turned quickly sour with DaimlerChrysler forced to launch an expensive restructuring plan to try to pull the Chrysler operations back from the brink and to staunch the red ink.

The problems at Chrysler eventually plunged the group into a 662 million loss four years ago. The group's market value has shrunk by more than 40 per cent since the Chrysler merger.

With losses mounting, the share price tumbling and his global vision unravelling, Schrempp has also faced increasingly rebellious shareholders and stormy stockholders' meeting in recent years.

"Today we have before us the scrap heap of Schrempp's visions of a global corporation," said Juergen Graesslin from Freiburg last April in a motion submitted ahead of the group's annual meeting.

Once known as 'Mr Shareholder Value', Schrempp saw his leadership suffer another devastating blow in April 2004 after a boardroom rebellion forced him to pull back from a USD 6.4 billion rescue plan for loss-making Japanese carmaker Mitsubishi, in which DaimlerChrysler had a 37 per cent stake.

More recently, DaimlerChyrsler has been forced to invest EUR 800 million in a new restructuring plan to try to stem the big losses run by the cartoon-style Smart minicar.

DPA

Subject: German news

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