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New DCX chief Zetsche to run Mercedes, too - 08/19/05

New DCX chief Zetsche to run Mercedes, too

Cordes steps down as head of luxury car unit; he was key rival for automaker's top job.

By Brett Clanton / The Detroit News

DaimlerChrysler said Thursday that Eckhard Cordes would step down as head of the Mercedes Car Group at the end of August and Dieter Zetsche, the incoming chief executive of DaimlerChrysler, would take over management of the luxury car division.

Cordes had been widely expected to leave the company after being passed over in July for the CEO job at DaimlerChrysler by Zetsche, his longtime rival. But his departure comes sooner than expected, spurring the company to move swiftly to plug a key management hole.

At Chrysler, the Auburn Hills unit of Germany's DaimlerChrysler AG, the move means that Thomas W. LaSorda, Chrysler's chief operating officer, will replace Zetsche as CEO three months earlier than expected.

The management change will put pressure on LaSorda to gain a quicker command of the nation's No. 3 automaker when it is trying to build on recent gains, while Zetsche's new assignment atop Mercedes will find him in the familiar role of turnaround artist.

Mercedes, the crown jewel of DaimlerChrysler's empire, has had its upper-crust image tarnished by a 1.3 million vehicle recall in April and other quality problems. Mercedes profits have slumped and it has been forced to undertake a costly restructuring at its Smart minicar unit.

Under a turnaround plan, Mercedes aims to save $5.6 billion by 2007 and raise profit margins to 7 percent, up from 3.3 percent last year.

Zetsche, who led Chrysler back to profitability in 2004 after a three-year restructuring that shed 40,000 jobs and closed six factories, may decide to accelerate cost-cutting efforts to get Mercedes back on track.

"You will see some very decisive action very quickly," said David Cole, chairman of the Center for Automotive Research in Ann Arbor. That could include closing the money-losing Smart brand, a move some industry analysts say is needed to pull Mercedes out of its slump.

"That would send the strongest possible signal that Dr. Zetsche is serious about changing the culture at (DaimlerChrysler)," Stephen Reitman, an analyst with Merrill Lynch, said in a July report.

DaimlerChrysler, in a brief statement, did not indicate how long Zetsche will run the division while he seeks a permanent successor to Cordes.

Cordes, 54, "will leave the company at his own request on August 31, 2005, after 29 years of service," and Zetsche would take over Sept. 1.

Analysts have speculated that candidates to succeed Cordes include Thomas Weber, head of research for DaimlerChrysler, senior Mercedes executive Klaus Maier, and Wolfgang Reitzle, the former No. 2 executive at BMW AG and former head of Ford Motor Co.'s Premier Automotive Group stable of luxury brands.

But at least one candidate mentioned in the media as a possibility -- Joe Eberhardt, Chrysler's marketing chief -- said he is not in the running.

"No one has ever talked to me about anything," he told The Detroit News this week. "And as far as I'm concerned, I have probably one of the best jobs in the industry, and I'm going to do it as long as I can."

Yet he didn't dismiss the idea out of hand. "Whatever happens, will happen," he said. "I can't think of anybody who wouldn't take (the Mercedes job) if they were approached with it. It's one of the best jobs in the car industry."

Another possible candidate, Volkswagen AG executive Wolfgang Bernhard, said last week that he planned to stay with VW.

Before joining VW, Bernhard was chief operating officer of Chrysler and was tapped to take over Mercedes in 2004, but was forced out at DaimlerChrysler before taking the reins.

On Wednesday, LaSorda said the transition would be smooth and he would continue the work Zetsche began in revitalizing Chrysler.

You can reach Brett Clanton at (313) 222-2612 or bclanton@detnews.com.

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New DCX chief Zetsche to run Mercedes, too - 08/19/05

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