The Truth About Cars » Zetsche The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Tue, 15 Jul 2014 13:19:48 +0000 en-US hourly 1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » Zetsche Zetsche Not Scared Of Chinese Trade War Wed, 12 Jun 2013 13:49:48 +0000 Dieter Zetsche - Picture courtesy

In a bout of severe wishful thinking,  Daimler CEO Dieter Zetsche told Reuters  that “Daimler does not expect the current spat between the European Union and China will escalate to include cars,”

Last week, news from China said  the Middle Kingdom could slap punitive tariffs on luxury cars imported from the EU, after the  EU slapped punitive tariffs on solar panels imported from China.

Today, China specialist Michael Dunne writes in the Wall Street Journal:

China, already angry about new EU tariffs on solar panels, will no doubt counter punch with an investigation into Europe’s lucrative luxury car exports to China.”

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Daimler In Trouble – And It Will Get Worse Wed, 10 Apr 2013 12:20:01 +0000

A few months ago, we discussed what Nissan/Renault’s Carlos Ghosn calls a “structural decline” of Europe: Missing car buyers, brought on by a sudden decline of births around 1970.  A population peak that now sits smack in the middle of the prime new car buying age, which in most of Europe is between 40 and 60 years, will retire in a few years, throwing Europe’s car industry in turmoil. Daimler, which has some of the oldest buyers, is beginning to feel the pain.

Daimler told Reuters and its shareholders that it might cut its 2013 profit expectations this month, which many analysts had not bought in the first place.

“Not much tailwind is anticipated from the markets in the coming months. For Europe in particular, there are no signs of a trend reversal,” said Daimler CEO Dieter Zetsche. Eroding sales in Europe and problems in China, paired with institutional arrogance,  made Daimler fall far behind rivals Audi and BMW.

At the cheap end of the spectrum, Fiat CEO Sergio Marchionne said the company’s losses in Europe could be worse than expected this year.

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Dr. Z Nearly Lost His Job Mon, 25 Feb 2013 11:22:56 +0000

“Dieter Zetsche is lucky that he can stay for three more years,” writes Der Spiegel in Germany. The labor side of Daimler’s Supervisory Board had demanded Dr. Z’s head, the magazine writes. After long debates with Daimler’s Supervisory Board Chairman Manfred Bischoff, a compromise was found.

Says Der Spiegel:

“Early in the year, Daimler Works Council chief Erich Klemm and metalworker union boss Thomas Klebe approached Bischoff. They announced that the labor side of the Supervisory Board will unanimously vote against an extension of CEO Zetsches’ contract.”

Labor, but also management criticized Zetsche’s style, or rather the lack thereof. Bischoff threatened that he could veto the decision. In a large German corporation, the Supervisory Board consists of 50 percent representatives of labor, the other half represent the capital. If votes are tied, the Chairman can break the tie.

Instead, a compromise was reached. Zetsche’s contract was extended only for three years instead of five. Wolfgang Bernhard, unloved by the unions for his gruff style, was sent to manage trucks.

For everybody’s edification, a German Supervisory Board  is not a Board of Management. The Supervisory Board supervises, it does not manage. The Supervisory Board cannot tell management what to do. All it can is approve or disapprove management’s proposals.

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The Castration Of Daimler’s Leadership: Only Three More Years For Dr. Z & Co. Fri, 22 Feb 2013 13:47:27 +0000

It is unusual that the supervisory board of a large German corporation denies the dearest wishes of its Management. If the board does not like a wish, the wish usually won’t be rendered in the first place, the tight community of executive assistants will see to it. It would be most unusual that the board denies the wish of its CEO to run the company for another five years. Daimler’s board did the impossible: It denied Dieter Zetsche’s wish for another five-year contract, and gave Dr. Z. three years to get Daimler’s house in order. It’s a mission impossible. The mustachioed will sit out his career as a fall guy.

Daimler‘s and Zetsche’s target, to be the world’s largest maker of premium cars, has moved into a foggy future far, far away. What’s especially unnerving in Stuttgart: The Bavarian “peasants” and “upstarts” of Audi and BMW are far ahead, they are picking up speed and customers around the world.

European industry insiders, and the better informed media are taking the decision as what it is, “a warning signal,” writes Der Spiegel, “the board is at the end of its patience.”

Most of Daimler’s troubles are in the land that is home to the success of Germany’s automakers: China. The board fears that “Daimler’s luxury Mercedes Benz brand is losing out to Volkswagen’s Audi and BMW, particularly in the important Chinese market,” as China Daily can’t help to opine. Daimler is expecting flat earnings this year, mostly because it had been asleep at the wheel in the Middle Kingdom.

Especially in China, Daimler has become a victim of its institutional arrogance. The Benz brand has degenerated into the choice of affluent has-beens. The standard joke in China is that many Audis parked in front of a restaurant are signs of a party meeting. A row of BMWs signal a party by nouveau-riche hooligans. Whereas a parking lot full of Benzes indicates retirees having tea. Being a party boss or a rich hooligan is highly aspirational in China. Retirement not so much.

The castration of Daimler’s leadership has been made complete by castling Zetsche’s darling and crown prince Wolfgang Bernhard with truck chief Andreas Renschler. The 58 year old R&D chief Thomas Weber also received only a three year extension. The board tried to cover this with a new rule that says that top managers who will be 60 years or older during the next extension will only get three years. Other carmakers are led by more virile seniors. The current contract of Volkswagen CEO Martin Winterkorn, who will be 66 in May, won’t expire until January 1 2017.  His Chairman Ferdinand Piech celebrated his 75th last year, and he hopes to live and work as long as Suzuki’s spunky Chairman Osamu Suzuki, who just turned 83.

Then there was the matter of the new contract of Legal and Compliance chief Christine Hohmann-Dennhardt. The former judge is 63 already. The board punted and delayed a decision until April, as Germany’s Handelsblatt heard. Then, that new rule is most likely forgotten.

In this both cynical and cyclical business, three years are not enough. The top of Daimler is set up for the fall. The competition is producing new cars faster than fertile rabbits, all the while Daimler received rancor for using a Renault engine in its latest A-Class, a sacrilege among Daimler’s aging customer base. The recent rise of the Euro already is blowing in the faces of German makers, it is especially chilling for highly “exportabhängig”, or export-dependent Daimler. Speaking of aging: Savvy insiders name Daimler as the next victim of Europe’s counting-down demographic time-bomb. Daimler’s customer core is around 60, and that segment is turning into a dying breed in Europe, very literally.

There are voices that say that there is a much higher order problem in Stuttgart. Daimler’s shareholdings are all over the place, and there is no big shareholder that puts his foot down and demands action. Credit Suisse analyst Erich Hauser opined to Reuters that part of the problem is “that no large Daimler shareholder, such as Kuwait, has a seat on the supervisory board like either the Quandt family does at BMW or the Porsche and Piech clans at Volkswagen.”

We have said that five years ago. But who’s listening to TTAC?

PS: Now that king and crown princes have been castrated, everybody is on the look-out for a new CEO. Three years is barely enough for such a search. Daimler’s CFO Bodo Übber is said to have the best chances at the moment. That’s just what Daimler needs, a bean-counter at the helm. But he is qualified. Übber is only 54.

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Strategie 2020: Mercedes Wants To Double Its Sales Wed, 24 Oct 2012 15:34:05 +0000

Mercedes wants to double its passenger car sales within the next eight years. By 2020, Mercedes wants to raise its sales to more than 2.6 million units annually, from  1.3 million this year. This is what Daimler CEO wrote in a letter to all employees. Automobilwoche [sub] has a copy.

Until 2015, Mercedes wants to launch 30 new models, 10 of them in segments Mercedes had ignored so far. Zetsche thinks the world market will grow by 50 percent until 2020, Mercedes wants to grow 100 percent.

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Daimler-Renault-Nissan Alliance Gets Results, GM-PSA Doesn’t Fri, 28 Sep 2012 11:24:17 +0000

TTAC readers who followed our past reporting on the developing relationship between Daimler and the Renault/Nissan Alliance will not be surprised in hearing what Carlos Ghosn and Dieter Zetsche told the press today. If you think you’ve heard it all before, you are right. You did here.

According to Reuters,

On the other side of Paris, the alliance between GM and PSA Peugeot-Citroen is said to be going nowhere. According to Bloomberg, a lowly joint parts-buying plan is delayed, allegedly because it is waiting for regulatory approval. The agreement, and possibly the announcement of joint production of cars, are now expected by the end of October, when all good news about GM are due to be announced.

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Bernhard After Dr. Z’s Job Again? Tue, 24 Aug 2010 15:15:50 +0000

If the German magazine Focus is informed correctly, then Dr. Z’s days at Mercedes are counted. Focus heard that Wolfgang Bernhard will run Mercedes, while Dr. Z. will run all of Daimler. „In a second step, Bernhard could succeed Zetsche 2012 as Daimler CEO,“ says FOCUS.  Currently, Bernhard is responsible for production and purchasing of Mercedes.

Bernhard is Daimler’s lost son. He was Zetsche’s sidekick during the Chrysler days in Detroit. He had been anointed as chief of Mercedes, but left in a huff after he couldn’t agree with Juergen Schrempp whether Mitsubishi should join the DaimerChrysler fray.

A few months later, her appeared as head of the Volkswagen group of brands (VW, Skoda, Bentley and Bugatti.) That didn’t last long either. At Volkswagen, Bernhard quickly earned the nickname “Terminator.” He didn’t make friends with the powerful unions. When Piech brought in Winterkorn as CEO, and as chief of the Volkswagen brand, Bernhard didn’t accept the demotion as head of production, and left.

When Cerberus bought Chrysler, he became a consultant. Some thought he would run Chrysler, but three months later, he was gone again. In February 2009, he was back at Daimler with a less than glorious job: Head of Mercedes vans. Since February 2010, he is in his new job at Mercedes. Everybody agrees that Bernhard is meant for something more important. Succeeding Zetsche won’t be easy: The two of then are considered bosom buddies.

According to Focus, the Daimler two-step has already been discussed with the supervisory board and the unions. The unions already agreed, with the proviso that Bernhard will be „closely monitored“ and should first get the job as „Mercedes boss on probation.“

A day later, an official Daimler spokesperson said the story is “a fabrication”

According to Automotive News Europe (ANE), Daimler reiterated in a statement that Zetsche will fulfil his contract until it runs out at the end of 2013.

The story of Bernhard wanting Zetsche’s job has been around for a while. During the Geneva Autoshow, Zetsche denied to journalists that Bernhard is his heir apparent at Daimler, reportedly saying: “It’s no secret that we worked well together and I’m happy to have him back. But he’s not my crown prince and he’s not my deputy.”

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Mobbing At Mercedes: Dr. Z Under Fire, Bernhard Back In Play Mon, 29 Mar 2010 09:36:22 +0000

While the world was watching Volvo going to Geely, Germany was playing artillery observer: Daimler’s Zetsche came under a barrage of criticism last weekend. Not because of the graft accusations. That counts as necessary evil, at least if done abroad. Zetsche committed a mortal sin: He’s losing money, again. After losing billions in 2009, Daimler is supposed to turn the corner this year. But it doesn’t look that way.

The profitability of Mercedes “is beyond the pale,” leaked an anonymous member of Daimler’s Supervisory Board to the Frankfurter Allgemeine Zeitung. The supervisor didn’t ask for Dr. Z’s head. Just half a head. Currently, Zetsche is CEO of Daimler AG. At the same time, he heads up the Mercedes brand. “This double responsibility is unacceptable,” grouched the board member. Dr. Z should focus on being the God of Daimler, and should leave mundane matters, such as the managing of Mercedes, to dedicated personnel.

As the topic did spread like wild fire to the Handelszeitung, Die Welt, and Reuters, immediately Wolfgang Bernhard was brought into play. Bernhard was Zetsche’s confidante and hatchet man when both went to Detroit to run Chrysler (“into the ground” as many will say at this point). Back from Detroit, Bernhard was designated as chief of the Mercedes brand. The unions didn’t like a cost cutter. Bernhard had to go, officially because of irreconcilable differences about the Mitsubishi engagement. He left in a huff in 2005 and appeared at Volkswagen as head of the VW brand, including Škoda, Bentley and Bugatti.

At Volkswagen, Bernhard quickly earned the nickname “Terminator.” Management revered him. But again, he didn’t make friends with the powerful unions. When Piech brought in Winterkorn as CEO, and as chief of the Volkswagen brand, Bernhard didn’t accept the demotion as head of production, and left.

He popped up at Cerberus as a “consultant” when Cerberus got its hands on Chrysler. That lasted only a few months. Last year, the Zetsche/Bernhard couple was reunited at Daimler. Bernhard was made head of the truck division, and everybody knew that this was only temporary. Since February this year, Bernhard is back on the board of Daimler, in charge of Purchasing and Production for Mercedes Benz cars. Immediately the wink, wink, nod, nod was: This man is the big boss in waiting.

Officially, Daimler denies all rumors. Manfred Bischoff, Chairman of the Supervisory Board, said: ”From my perspective, this discussion does not exist.” A Daimler spokesman, disturbed during his well-earned weekend, said: “Dieter Zetsche is and remains in charge of both.”

At the Geneva Auto Show, Zetsche already had denied rumors of Bernhard’s rise: “It’s no secret that we worked well together and I’m happy to have him back. But he’s not my crown prince and he’s not my deputy,” Dr. Z. said to Automotive News. “If you want to do him a favor, stop speculating,” Zetsche told journalists. Seems like Germany’s intrepid reporters are in no mood to dole out any favors.

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Dr. Z Hospitalized Wed, 13 Jan 2010 12:55:31 +0000 Zetsche, hiding the injured left shoulder. Picture courtesy

Daimler’s Dieter Zetsche arrived at NAIAS with his left arm in a sling. What happened? Too much arm wrestling with unions or suppliers? Nah, that would be the right arm. Turns out, Dr. Z was injured by a woman. On the ski slopes in Austria, a female snowboarder had crashed into Zetsche. Left shoulder fractured. Dr. Z wore a helmet, which avoided more serious damage.

Germany’s BILD Zeitung reports that doctors at the Austrian hospital prescribed at least 6 weeks of strict convalescence. Says BILD: “Daimler’s boss ignored them. He popped some pain killers, flew to Detroit with shoulder and arm bandaged. Courageously, he presented the new Mercedes products.”

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