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Next Daimler CEO grabs wheel of Mercedes group

Zetsche vows to turn around the ailing vehicle division

Dieter Zetsche, next CEO of DaimlerChrysler, shows off new S-Class Mercedes in Frankfurt Monday.
Dieter Zetsche, next CEO of DaimlerChrysler, shows off new S-Class Mercedes in Frankfurt Monday.
Associated Press, Frank Augstein

FRANKFURT, Germany — DaimlerChrysler's next chief executive said Monday that he would try to emulate his success in turning around the Chrysler division by improving the company's Mercedes unit, which has suffered from declining sales, customer dissatisfaction and quality problems.

Dieter Zetsche, who moved to Mercedes from Chrysler earlier this month and will replace Juergen Schrempp as CEO of DaimlerChrysler on Jan. 1, said he planned to direct the Mercedes group indefinitely and cautioned that any reform would take time.

"Let us analyze this internally," the 52-year-old German said at the Frankfurt auto show. "I have only been on the job for 12 days."

Zetsche is taking control of a division that was once the pride of DaimlerChrysler AG. Industry watchers, particularly in Europe, are keen to see if he can invigorate Mercedes the way he did Chrysler, which posted its eighth straight quarterly operating profit in July.

Asked if there would be cost-cutting measures or even job cuts at the Mercedes business, which includes the struggling Smart compact car unit, he declined to be specific.

"The whole production process has to be addressed," he said.

Analysts and reporters gathered at the International Auto Show also heard from Wolfgang Bernhard, the former chief operating officer of Chrysler Group who is now CEO of Volkswagen AG's VW brand. Bernhard called Volks-wagen's U.S. unit a "company in crisis." He said Volkswagen planned to turn around its U.S. business, which has posted losses amid fierce competition, within three years with the help of some new cars.

"By 2010, we will bring between five and 10 completely new models . . . to market," he said.

Zetsche made a showman-style arrival at his first major industry appearance since being tapped to take over the German-U.S. automaker, rolling up in the new Jeep Commander and sporting a leather jacket and a baseball cap.

"For me, today is a sort of coming home," he said.

Zetsche was named as the next DaimlerChrysler boss after Schrempp unexpectedly announced July 28 that he would step down at the end of the year. The move relieved investors who felt the Schrempp-engineered merger of Daimler and Chrysler in 1998 had failed to bring the returns promised.

That was followed on Aug. 18 by the news that Zetsche would take over Mercedes from Eckhard Cordes, who helped Schrempp plan the merger and was once considered a leading contender for the top job.

"Mercedes Benz is the crown jewel in the company," Zetsche said as he showcased the Vision R 63 AMG, which the company has dubbed a fresh "interpretation of the new Mercedes-Benz R-Class."

Powered by a new AMG 6.3-liter V8 engine, the company hopes the Vision will cause customers to look past the company's recent quality issues and embrace the sleek, six-seater car.

Zetsche also unveiled the new S-Class, as well as the ML 63 AMG, the most powerful M-Class ever. The SUV-style vehicle boasts a 510-horsepower, 6.3 liter V8 engine, which is also part of the R-Class the company showed off.

The International Auto Show, held every two years, is one of the major events in the automotive world, with manufacturers, designers and car lovers converging to inspect the latest automotive ideas.

More than 1 million people are expected at the event, which opens its doors to the public on Saturday and runs through Sept. 25.