Zetsche to replace Schrempp
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Change comes Jan. 1; DaimlerChrysler Q2 beats forecasts
FRANKFURT -- DaimlerChrysler's Chief Executive Juergen Schrempp, who shepherded Daimler-Benz AG through its historic merger with Chrysler Corp. in 1998, will step down at the end of this year and will be replaced by Chrysler group CEO Dieter Zetsche.
Schrempp, 60, will leave his position effective Dec. 31. Chrysler COO Tom LaSorda will succeed Zetsche, 52. Chrysler's research and development chief, Eric Ridenour, will replace LaSorda.
"The Supervisory Board and Prof. 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," said Hilmar Kopper, chairman of DaimlerChrysler AG's supervisory board. "The decisions of the supervisory board have been made unanimously after a thorough process."
Zetsche was seen as one of two DaimlerChrysler insiders most likely to succeed Schrempp. Eckhard Cordes, the 54-year-old Schrempp acolyte who was named Mercedes-Benz AG chief last year, was also seen as a strong candidate, and many inside sources had named Cordes as the expected successor. Cordes is a longtime Schrempp ally who fixed the group's vast commercial-vehicle operations.
Zetsche had opposed Schrempp's lobbying in 2004 to keep providing money for Mitsubishi. Daimler's board subsequently cut off additional financial support in April 2004.
Zetsche, who helped turn around the number-three U.S. automaker at a time of ferocious competition in North America, was named Automotive News Industry Leader of the Year for 2005 and has been named the newspaper's top CEO for North America for two consecutive years.
"(Schrempp) has left voluntarily after a dialogue with the supervisory board," a spokesman said Thursday, adding that Schrempp had proposed Zetsche as his successor.
Although Schrempp's contract runs until 2008, he will only draw his salary until the end of this year, the spokesman said.
Zetsche gets a five-year stint as group CEO.
The unexpected news came as DaimlerChrysler reported that its second-quarter operating profit fell 20 percent to 1.67 billion euros ($2.02 billion), beating expectations.
The world's fifth-biggest carmaker reiterated on Thursday its forecast for slightly higher 2005 operating profit excluding restructuring costs for its loss-making Smart minicar brand.
Instead, Mercedes posted a 12 million operating profit despite an extra 311 million euros in charges to restructure Smart.
U.S. arm Chrysler, sucked into a North American price war with rivals General Motors and Ford, saw operating profit gain 4 percent to 544 million euros, also above analyst estimates of 412 million.
Traditional cash cow Mercedes has been grappling with the strong euro, model changeovers, spending to fix quality problems and hefty losses at Smart. Its first-quarter operating loss of 954 million euros marked its first red ink since 1993.
The profit collapse prompted a new efficiency drive that aims to boost earnings at the division by more than 3 billion euros and restore an operating margin of 7 percent by 2007.
The company said on Thursday it aims to improve Mercedes earnings by "up to 3.5 billion euros".
DaimlerChrysler's market-leading commercial vehicles business turned in another strong quarter amid a truck boom, especially in North America.
Reuters contributed to this report
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Great News!! Zetsche knows what he's doing.

 

Yes he does but I think he was better as head of the chrysler division.

 

If you are a fan of the entire DamilerChrysler corperation, johnsocal is 100% right about this being great news. Zetsche is battle hardened, know what the h*ll he's doing, and has been the driving force behind reversing Schrempp's rape of Chrysler (sorry, but there is no better way to describe Schrempp's plundering of Chrysler from 98 to just a few years ago).

LaSorda is pretty hard nosed and will continue making sure Chrysler is run tightly. I think he's going to have a ton more pull with Zetsche running the company than Zetsche had with Schrempp.

I really don't see a down side to this at all.

 

the downside I see is that he is now responsible for the corp as a whole and not a champion for Chrysler. We will see what he does.

 

Maybe the ME will see the light of day now.

 

The trump card in all the working relationship LaSorda and Zetsche had at Chrysler. After battling in the trenches together, I suspect LaSorda will have more cooperation from Zetsche. Zetsche, for his part, will have more professional "ownership" in Chrysler since he did go through alot to get funding back for Chrysler's new products.

I doubt he'll forget what that was like.

Doubt it. The reason it was cancelled was because Chrysler wanted to find a cheaper way to create a halo car, and they did..... the Firepower.

Daimler, for a change, didn't have a hand in that.

 

Speaking of the Firepower, I saw one (the one?) at the Mile High Nationals two weeks ago, it was an outstanding looking car. Put a six speed manual in that baby and it will be a serious alternative to the base 'Vette for people looking for a 2 seat GT car.

 

Personally I would not turn down the 5 speed auto in that car

 

I disagree completely with your acessment of Schrempp and Chrysler. If it were not for the merger who knows what would have happened to a stand alone Chrysler Corp. All of the problems that lead to the 2000 meltdown were the doings of Chrysler management at the time and not HQ in Germany. It is hard for me to imagine that it took that long to turn the company around but it did. Eaton sold Daimler-Benz a white elephant. If I am critical of Schrempp for one glaring fault is that he did not dig deeper into Chrysler's lack of managerial depth, lack of future product investment and probably the biggest of all, Chrysler's glaring quality issues at the time reflecting a very poor product development process which eroded profitability and buyer confidence. Schrempp under Zetsche and Bernhard basically rebuilt the Chrysler Group with the 2000 restructuring. Another glaring issue with the initial deal that many analyst applauded was that there was little product overlap between DB and Chrysler. This reflected in the two companies only being able to share over head cost and not leverage economics of scale in product development through parts sharing. This resulted in the Alliance with Hyundai and Mitsubishi. We have seen where that went. But this lack of over lap resulted in the LX cars which would not have happened without the merger. The bottom line was Eaton sold DB a bill of goods and Chrysler was heading for the perfect storm if the merger did or did not occur.

I think in the end Schrepp will be remembered as a modern day William Crappo Durant as a CEO but he did give Zetche the resouces to develope many new products that are just about to hit the market that really venture into new territory for the company.

 

Thanks evok. Very interesting perspective.

 

Thanks - I do applaud Zetsche for putting Chrysler back together. This should be interesting because DCX has such a huge hole in the Asian Pacific region. Particulary when the Hyundai deal fell apart and with Mitsubish being such a mess. I wonder what he has up his sleave. To this day I think Schrempp's biggest strategic blunder was not purchasing Nissan when he wanted to. Granted that would have added another basket case of a company to the fold at the time and in the short term over extended the company's resources both in talent and money. But what a power house that would have been. Remember he wanted "X" in DCX to stand for "H" as in Honda but Nissan was a diamond in the rough and the only major Japanes company in play at the time.

 

I don't see the LX cars not happening without Chrysler. If you think Chrysler had reliablilty problems, you should look at MB, which is still fighting problems. MB made Chrysler look like a champ.

The LX cars were suppose to be on the LH chassis, RWD. The concept Charger was suppose to hit the showroom floor by 2002. The LX/LH RWD cars were in the pipeline long before Dr Z, or whoever, changed the platform.

Guy, while I would like to see the Firepower, the only thing that makes me think that the ME might see the light of day is that Dr Z had a lot to do with that car. Remember the ME was almost to production before it was canned, could happen to the Firepower.

 

WHAT???? I dont really get any of what you just said. As far as I know, the concept charger wa NEVER suppose to hit show room floors. By the way all of the German mfgs have quality problems. That does not stop them from selling cars to people that should have no tolerence for it.

 

Sorry, I was a little tired last night when I wrote that.

The concept Charger was suppose to be in production by ~2002 until the crew from Germany came over and said no and changed to the LX chassis. The LH chassis was originally setup as a FWD/RWD and I think a AWD chassis, not sure about that last one. The concept Charger even sat on a LH chassis. Remember the shark Charger drawing that showed up on some old Chrysler forum, forgot the name. That is what the production Charger was suppose to look like before the chassis change.