Dieter Zetsche begins this week the enormous task of trying to knock the U.S. Chrysler business into shape after being sent to America by the DaimlerChrysler board on Friday to replace James Holden, who was abruptly removed from the post of chief executive officer.
Along with Zetsche, DaimlerChrysler, which is the manufacturer of Mercedes Benz cars, has sent another Stuttgart trouble-shooter to the U.S., Wolfgang Bernhard, who has been appointed Chrysler's new chief operating officer.
While competition in the U.S. car market intensifies, the dramatic decline in Chrysler's fortunes have already lead to a string of top executives leaving the group's headquarters at Auburn Hills near Detroit and the arrival of new managers from Stuttgart.
With DaimlerChrysler warning of a worse-than-expected fourth quarter loss at Chrysler, Zetsche, who is known in the global car industry for his trademark walrus moustache, has been given the job of undertaking a major restructuring of Chrysler's operations.
The move to install Zetsche in Auburn Hills came just two months after DaimlerChrysler packed off another executive, Rolf Eckrodt, to take control of its interests at Japan's Mitsubishi Motors, which has been hit by mounting losses and a scandal involving a cover up of its recall practices.
The decision to put Zetsche behind the wheel of the troubled Chrysler operations, has been generally well received by the auto industry. The 47 year-old German electrical engineer was previously praised for his work in turning around DaimlerChrysler's commercial vehicle unit.
A Daimler veteran, Zetsche is often seen as a possible successor to the group's chief, Juergen Schrempp, who was the architect of the DaimlerChrysler amalgamation, the world auto industry's biggest merger.
DaimlerChrysler's decision, however, to put Eckrodt in to sort out Mitsubishi's problems has raised a few eyebrows.
In particular, as the former chief executive of Adtranz, a train systems company which DaimlerChrysler sold in August, Eckrodt appears to have only limited experience in the often enigmatic world of Japanese business.
DaimlerChrysler holds about one third of Mitsubishi, which it bought this year as a way of expanding into the fast-paced car markets of Asia.
As a measure of the depth of the problems facing DaimlerChrysler its share price has been skidding down for the last few weeks with the stock hitting a record low on Friday as analysts speculated about the scale of the losses the company could expect to post for its fourth quarter.
Shares in the group have halved since Daimler and Chrysler teamed up to form the world's fifth biggest car group with the company's problems a reminder of the difficulties that engulfed the Munich- based BMW AG as a result of its loss-making British Rover offshoot.
"Tough market conditions in the United States have intensified further," declared DaimlerChrysler in a statement following Friday's board meeting.
"As a consequence, results at the Chrysler group will fall below the last forecasts and this affect the earnings of DaimlerChrysler AG," the group said.
The German-American car giant had one of the worst performing shares in the third quarter with its stock having plummeted from 123 euros (108 dollars) at the time of the formal 35 billion dollar merger in November to 49.30 euros on Friday after it revealed it was facing another quarterly loss.
Last month the fused DaimlerChrysler group reported an 78 per cent plunge in profits during the third quarter with some German shareholders starting to wonder whether the merger dubbed by Schrempp as "a marriage made in heaven" was worth it after all.
Now analysts are forecasting that the group will turn in a fourth quarter loss of between 50 and 100 million euros.
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This follows Mitsubishi, which is Japan's fifth biggest carmaker, reporting a 96.3 per cent leap in its net loss to 75.63 billion yen (706.8 million dollars) in the six months from April to September.
Mitsubishi's group sales fell by 1.5 per cent following the company's announcement in August that it had systematically covered up recalls and continued to repair defective vehicles without reporting the cases to the Japanese transport ministry.
(dpa)
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