New DaimlerChrysler CEO the star at car show

12th September 2005, Comments 0 comments

12 September 2005, BERLIN - Coming just months before Dieter Zetsche takes the helm of transatlantic auto giant DaimlerChrysler, this month's Frankfurt motor show will represent a chance for the German-based carmaker to present its new chief to the global car industry.

12 September 2005

BERLIN - Coming just months before Dieter Zetsche takes the helm of transatlantic auto giant DaimlerChrysler, this month's Frankfurt motor show will represent a chance for the German-based carmaker to present its new chief to the global car industry.

The motor show will also be one of first major public engagements for Zetsche since he also took over the role as head of DaimlerChrysler's flagship Mercedes-Benz group at the start of the month.

The 52-year-old Zetsche is to hold both jobs - two of the most prestigious posts in German industry - while the search goes on for a new head for the luxury carmaker. This follows the decision by former Mercedes chief Eckhard Cordes to step down after apparently losing out in the power struggle over the DaimlerChrysler succession.

Known as something of a "car guy", Zetsche, who is credited with having successfully overseen the financial turnaround at DaimlerChrysler's hard-pressed north American operations, takes over the group's chief executive office in Stuttgart at a crucial time for the world fifth biggest carmaker.

Apart from having to press on with the restructuring of Mercedes- Benz, Zetsche moves into the driving seat at DaimlerChryser against the background of market speculation that the move by Germany's biggest bank, Deutsche Bank AG, to scale back its holding in the group has left the carmaker vulnerable to a takeover.

Already there have been reports of foreign hedge funds circling the group in the hope of a rebound in DaimlerChrysler's shares which dropped dramatically in the wake of Daimler's troubled merger with Detroit-based Chrysler about seven years ago.

The DaimlerChrysler share price has already jumped about 17 per cent following the shock announcement in July by Juergen Schrempp that he was standing down as chief executive at the end of the year to make way way for Zetsche and the hope that the new management will arrest Mercedes' sales and earnings slump.

Indeed, the pickup in the share price also appears to be something of a vote of confidence from the stock market in Zetsche's management skills and the prospects for the company under his leadership.

But another major headache waiting for Zetsche is what to do with the Mercedes-Benz Smart minicar.

DaimlerChrysler has been forced to invest 800 million euros (996 million dollars) in a new restructuring plan to try to stem the big losses run up by its Smart operations.

Despite the tough cost-cutting programme he launched during his five years at Chrysler, Zetsche, who was born to German parents in Istanbul and grew up in Frankfurt, still managed to win the hearts of the group's sceptical U.S. employees with his humble manner.

Zetsche, who joined Daimler-Benz straight after graduating in 1976, was parachuted into Detroit in 2000 to sort out Chrysler's financial mess following its merger with Daimler-Benz in 1998.

His arrival was met with almost outright hostility by workers who saw him as the vanguard of attempts to "Germanise" the once-proud U.S. automaker.

But Zetsche, with his trademark handlebar moustache, confounded his workers by winning them over with what The Detroit News describes as "his humble heart" and "gracious personality".

"(Zetsche) demonstrated command of the car industry and proved that he cares deeply about people. He ate lunch with workers, listened to them and even let them laugh at his self-deprecating jokes," said the newspaper.

More importantly, Zetsche saved Chrysler from disaster.

When he took command of the company in 2000 it was running up multi-billion dollar losses and its very survival seemed in doubt.

He swiftly cut 26,000 of the company's 128,000 jobs, closed six plants and demanded discounts of up to 15 per cent from all suppliers.

What will also be interesting is whether Zetsche will seek to impose on DaimlerChrysler the series of principles he set out for running Chrysler.

Apart from the firm belief that profits must come before market share, these included listening more closely to customers and revamping products to swiftly deliver to showrooms what people want to buy as well as boosting the morale of employees.

The formula worked at Chrysler and the carmaker zoomed back into the black in 2004 with a stunning profit of 1.4 billion euros after cutting losses to about 500 million euros in 2003.

"Zetsche has been an important ambassador for Germany," gushed The Detroit news.

With Chrysler now shining, it is hardly a surprise that its troubled parent company, DaimlerChrysler, is now rushing Zetsche back to Germany.

DPA

Subject: German news

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