Cost cutting and efficiency programs in all divisions haven't stopped the multi-billion dollar losses.
The global automotive Great Recession could easily claim another high profile executive as the speculation intensifies in the German press that Daimler AG’s chief executive, Dieter Zetsche, is about to get the boot.
Daimler has it is share of challenges in recent months and looks to face more of the same in 2010 as Mercedes-Benz because of its expensive lineup gained little from CARs, aka cash for clunkers programs in the US, and similar programs across Europe.
Meanwhile, Daimler has spent billion on developing new diesel technology just as the world was shifting towards regulatory schemes and taxpayer subsidies favor hybrids and electric vehicles. The premium incurred by advanced diesel engines, as well as pricing issues in some markets make it all the more difficult to sell them to consumers.
In addition, one of Daimler’s principle partners in China, Beijing Auto, seems eager to build its very own automotive empire. Cooperation with BMW, which could benefit both companies, is going nowhere fast, largely because the Quandt family is loathe to give any quarter to its old rival.
In fact, the diffused ownership structure is one of Daimler’s principal vulnerabilities in today’s tumultuous automotive world. The company is at the mercy of fickle shareholders.
While German shareholder meetings tend to be long and tedious, they also have a dramatic element to them and at the Daimler shareholder’s meeting last spring in Berlin, it was evident that there were plenty of dissatisfied shareholders around critical of Zetsche’s conduct of the company’s affairs.
Zetsche probably made the right earlier this year when he arranged to sell a large block of stock to a group of Middle Eastern investors. However, the move riled Daimler’s smaller shareholders who viewed it, correctly, as a dilution of their own holdings.
Daimler’s small shareholders — and some fund managers as well — also view Zetsche as a protégé of the detested Juergen Schrempp, who they believe is enjoying a lavish retirement at their expense.