DaimlerChrysler Sticks with CEO, Renews Board

DaimlerChrysler AG on Wednesday gave Chief Executive Juergen Schrempp four more years to salvage his dream of creating a global carmaker and promoted three younger executives to key jobs across the group.

The company said in a statement it planned to extend Schrempp's contract to 2008 and announced the appointment of a new head of luxury cars unit Mercedes, a new finance chief and a new head of operations at Chrysler, all in their forties.

The changes come as Schrempp, 59, battles to revive the group's struggling Chrysler division and fends off criticism of the 1998 link-up between Daimler-Benz and the US automaker that he dubbed a "marriage made in heaven".

"When you look at the scale of the task facing the CEO, whoever it is, there is a limited field of candidates who are both able and willing to take it on," said Michael Raab, analyst at private bank Sal Oppenheim in Frankfurt.

"It ensures continuity for the next few years but some shareholders might not view this too favourably."

DaimlerChrysler shares, which are worth less than half their all-time high, gained 0.8 percent to 36.95 euros by 1625 GMT, lagging the Dow Jones European autos index.

"It would have been a good time to replace Schrempp - his plan to turn DaimlerChrysler into a global carmaker did not work out," said an analyst who declined to be named.

The world's fifth largest carmaker said Wolfgang Bernhard, 43, would take over as Mercedes chief on May 1, replacing Juergen Hubbert, who will head the group's executive automotive committee.

As chief operating officer at Chrysler, Bernhard worked with the US carmaker's chief Dieter Zetsche to implement aggressive savings in a bid to return it to profit. He will be replaced by Thomas LaSorda, 49, head of manufacturing at Chrysler.

The Stuttgart-based group is due to provide details of a 700-million-euro ($892 million) drop in year operating profits on Thursday and reveal whether Chrysler met its break-even target last year.

Global Challenges

Its problems do not end in the United States. Mercedes, the group's profit driver, is facing stiff competition in the luxury segment from Munich-based BMW, and DaimlerChrysler may be forced to pump more money into loss-making Mitsubishi Motors Corp, in which it owns a 37 percent stake.

A senior Mitsubishi official told Reuters on Wednesday that Mitsubishi Chief Executive Rolf Eckrodt, a former DaimlerChrysler manager, may resign to take responsibility for the company's poor performance.

German publication Manager Magazin said DaimlerChrysler was preparing to dispatch Andreas Renschler, currently head of its Smart car division, to replace Eckrodt by the end of the year.

Mitsubishi's operating loss could hit 100 billion yen ($945 million) for the year to the end of March and DaimlerChrysler may have to contribute 70 billion yen to a 200 billion bailout, newspapers have reported.

DaimlerChrysler also confirmed Bodo Uebber would become chief financial officer on December 16, replacing Manfred Gentz, who is retiring. Uebber, 44, was promoted to the executive board last year as the designated successor to Gentz.

Sal Oppenheim's Raab said Bernhard had performed well at Chrysler and that replacing him with a Canadian would send the right political signals.

"With (Dieter) Zetsche and Bernhard running Chrysler and only a few Americans left in the upper echelons of Chrysler management, there was a perception that the German conquest was complete," he said.

DaimlerChrysler is currently engaged in a courtroom battle with billionaire investor Kirk Kerkorian who claims the $36 billion deal that created the group was only billed as a "merger of equals" to keep a lid on the cost to Daimler-Benz.