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DaimlerChrysler CEO Schrempp to Step Down

DaimlerChrysler CEO Juergen Schrempp, architect of the controversial merger between Daimler-Benz and Chrysler Corp., will step down and turn the top job over to Chrysler head Dieter Zetsche, the company said Thursday. Zetsche will be replaced at Chrysler by current No. 2 Thomas LaSorda in changes that take effect at the end of the year. Chrysler executive Eric Ridenour will take LaSorda’s place.

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From Associated Press

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FRANKFURT, GERMANY — DaimlerChrysler CEO Juergen Schrempp, architect of the controversial merger between Daimler-Benz and Chrysler Corp., will step down and turn the top job over to Chrysler head Dieter Zetsche, the company said Thursday.

Zetsche will be replaced at Chrysler by current No. 2 Thomas LaSorda in changes that take effect at the end of the year. Chrysler executive Eric Ridenour will take LaSorda’s place.

The news came as the world’s fifth-largest automaker reported improved quarterly earnings and a slight rise in sales. DaimlerChrysler’s shares jumped nearly 10 percent after the announcements. The stock traded at 39.80 euros ($47.72) by afternoon in Frankfurt.

Schrempp, who started with the company 44 years ago as an apprentice mechanic, designed the 1998 merger of Germany’s Daimler-Benz and Detroit’s Chrysler Corp. in an attempt to create a global auto giant. The merged company has struggled, first with heavy losses at the Chrysler division and now with weak earnings at its former cash cow, Mercedes.

Some investors have criticized Schrempp because the company’s stock price has lagged since the merger. Comments he made about the deal in a newspaper interview also led to investor Kirk Kerkorian suing the company over the terms of the deal, a suit Kerkorian lost earlier this year.

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In a letter to employees, Schrempp said that “through our brand and product portfolio and our presence in more than 200 countries, we are uniquely positioned. Profits have risen steadily, and we are on the way to reaching the goals set under my chairmanship.”

“In view of this positive development, the board of directors of DaimlerChrysler and I agreed that the end of 2005 would be the best time for a change in leadership of the company.”

Schrempp said during a conference call that he was leaving in good spirits.

“All in all, I am satisfied with the advances made,” he said. “Clearly DaimlerChrysler is not yet where it wants to be, although I am sure it will arrive. We are heading precisely in the right direction.”

“On a personal note, I can assure you that I am a very happy man.”

Zetsche, 52, has earned plaudits for his turnaround of Chrysler, which has bounced back on the strength of hot-selling new models such as the 300. DaimlerChrysler said Schrempp, whose contract was valid through 2008, would leave at the end of the year and draw no salary after the end of 2005.

The supervisory board and Schrempp “are in full agreement that the end of the year 2005 is the optimal time for a change in the leadership of the company,” board Chairman Hilmar Kopper said. “The decisions of the supervisory board have been made unanimously after a thorough process.”

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Schrempp has risen through management positions including the leadership of Daimler-Benz operations in South Africa, the U.S. and in Germany. He also served as chairman of Daimler-Benz Aerospace.

The news partly overshadowed DaimlerChrysler’s release of second-quarter earnings, which came to 737 million euros ($884 million) compared with 577 million euros a year earlier. Its operating profit fell 20 percent to 1.67 billion euros from 2.09 billion euros.

Sales during the quarter rose slightly to 38.4 billion euros ($46.04 billion) from 37.07 billion euros.

The results were helped by a strong performance from the truck and bus unit, which offset narrower earnings in its luxury Mercedes Car Group unit.

The Mercedes unit posted a scant operating profit of 12 million euros ($14.39 million) for the quarter, a 98 percent drop from last year. Revenue was 12.4 billion euros ($14.87 billion), down 4 percent from 12.97 billion euros.

The company’s Chrysler Group, however, showed a 4 percent gain, with operating profit rising to 544 million euros ($652.26 million) from 521 million euros a year ago. Sales were down 1 percent to 13.03 billion euros ($15.62 billion) from 13.2 billion euros.

2005 The Associated Press. All Rights Reserved.

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