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Daimler Boss Zetsche Gets Vote of Confidence

But the CEO and Mercedes brand boss faces tough challenges.

by on Feb.21, 2013

Daimler AG CEO Dieter Zetsche during the preview of the maker's latest E-Class line.

Daimler AG Supervisory Board, facing a troubled European economy and fierce competition from rivals in the luxury segment, has given a three-year extension to Dieter Zetsche, the maker’s chairman and the head of its flagship Mercedes-Benz brand.

There had been some question about whether the contract would be renewed for Zetsche, who turns 60 in May, in light of problems that include slumping sales in China, lagging margins and the ongoing crisis in Europe. But it became clear that Daimler’s board wasn’t willing to risk a leadership change at the moment.

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“The long-term orientation of the Group’s leadership is an essential factor for Daimler’s sustained success,” noted Manfred Bischoff, chairman of Daimler’s supervisory board. “Dieter Zetsche and the Board of Management have a clear plan how to further enhance Daimler’s overall performance together with their team. Dieter Zetsche is distinguished of course by his great experience, but also by his ability to combine a feeling for cars with sound engineering knowledge and an entrepreneurial approach,” Bischoff added.

The supervisory board, in another signal that it was prepared to see the company continue its heavy spending on new technology, also extended the contract of Thomas Weber, Board of Management Member for Group Research and Mercedes-Benz Cars Development, was also extended until December 31, 2016. Weber has been a member of the Board since January 1, 2004.

“Research and development are two key areas in the automobile industry. I am therefore delighted that we will continue the successful collaboration with Thomas Weber. He will steadily continue to maintain Daimler’s claim to technological leadership,” Bischoff said.

Both Zetsche and Weber’s contracts were slated to expire this coming December.

Zetsche has been a member of the Daimler Board since December 16, 1998 and its Chairman since January 1, 2006. He is also Head of the Mercedes-Benz Cars division. He previously ran the Chrysler side of what was then DaimlerChrysler AG, returning to Germany to take over from Juergen Schrempp, the architect of that abortive “merger of equals.”

The collapse of DaimlerChrysler cost the company and its shareholders tens of billions of dollars in lost value. It nearly destroyed the Chrysler side and while the German half of the company emerged far stronger it has struggled to regain its once lofty position – and premium stock price.

(Daimler earnings get squeezed. Click Here for more.)

Zetsche has overseen a grand expansion of the Mercedes brand, the maker launching a vast array of new products. But he also has had to kill off the once-promising Maybach brand, which Daimler AG launched in a bid to challenge the established Rolls-Royce and Bentley marques.

And while Zetsche had to put things back together after breaking up DaimlerChrysler, he soon entered another global partnership with the Renault-Nissan Alliance. He repeatedly has made it clear that this is a partnership of convenience, rather than the full-on merger Daimler had just walked away from.

Nonetheless, the three partners have ramped up their joint venture and will now share development of a number of products, as well as their manufacture. Still more ventures appear to be in the works. In fact, Zetsche has told that Daimler is considering placing a Mercedes plant within the confines of a new Nissan manufacturing campus being built in central Mexico.

The new alliance could drive down costs, especially for the long-troubled Smart brand that has been one of Zetsche’s biggest headaches. A new 4-seater, the Smart forfour, is due out next year and will share its platform with the next-gen Renault Twingo.

China, meanwhile, has turned into another challenge for Zetsche, who had billed the fast-growing Asian market as a critical part of Mercedes’ future growth plans. The management team was shaken up late last year and its new boss was, notably, given a spot on the Daimler management board.

(For more on Daimler’s struggles in China, Click Here.)

Then there’s Europe, which has seen sales slump to their lowest level since the mid-1990s, with no near-term turnaround in sight.

Add the fact that Mercedes’ long dominance in the global luxury market has been challenged by not only BMW but also Audi and it’s clear that Zetsche will have to deliver some miracles during the next three years.

Meanwhile, the DAG board also announced that two other executives, Andreas Renschler and Wolfgang Bernhard, will exchange jobs on April 1.

Andreas Renschler will assume Board of Management responsibility for production and purchasing of Mercedes-Benz Passenger Cars & Mercedes-Benz Vans. At the same time, Dr. Wolfgang Bernhard will assume Board of Management responsibility for Daimler Trucks.

“Wolfgang Bernhard and Andreas Renschler are two highly experienced members of Daimler’s Board of Management. With this change, they will both be able to utilize their management know-how from their previous responsibilities within in their new functions, thus expanding their own expertise in all automobile areas” Bischoff said.

Bernhard is widely regarded as Zetsche’s most likely successor and has been in charge of Daimler’s ongoing efforts to contain costs.

Renschler has been a member of the Board of Management of Daimler AG and Head of Daimler Trucks since October 1, 2004. Bernhard has been a member of the Board of Management of Daimler AG and Head of Operations Mercedes-Benz Cars since February 18, 2010.

Paul A. Eisenstein contributed to this report.

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