Embattled Daimler AG boss Dieter Zetsche will this week defend his strategy - and his job - by unveiling a new Mercedes seen as key to the premium carmaker's turnaround.
GENEVA: Embattled Daimler AG boss Dieter Zetsche will this week defend his strategy - and his job - by unveiling a new Mercedes seen as key to the premium carmaker's turnaround.
In his first major appearance since the board shortened his contract last month, Zetsche will be looking to the CLA compact to fix Daimler's chronic underperformance in small cars, as well as his own management record. Both objectives face long odds.
Zetsche, 59, is on notice that Europe's luxury laggard must narrow the gap with BMW and Volkswagen AG's Audi by repairing a botched China expansion and winning new buyers for an expanded range of minis and subcompacts. "Getting China right is critical, and Mercedes also needs to appeal to younger clients -which is why new vehicles like the CLA are very important," said Barclays analyst Michael Tyndall. "The question is whether management now has the mandate and the wherewithal to realize the opportunities."
The CLA, which debuts at the Geneva car show on Tuesday, is a test of Daimler's ability to shake off a stuffy brand image partly blamed for Mercedes' failure to keep pace with its two main competitors. Its premiere closely follows the February 21 board decision to trim Zetsche's mandate to three years from the expected five and swap the manufacturing and truck division heads, in a move seen as improving both men's CEO prospects.
Under Zetsche's seven-year reign, Daimler stock has broadly flatlined - up 6 per cent on the period - while BMW advanced 87 per cent VW's share price increased five-fold. Earnings goals have been repeatedly scrapped as Mercedes failed to match rivals' scale and efficiency in smaller cars, or their advances in China. Daimler's underlying profit fell 10 per cent last year and is seen flat in 2013.
"The pressure is on for Zetsche to deliver on his strategy and close the gap with Audi and BMW," said Stefan Bratzel, head of the Centre for Automotive Management at the University of Applied Sciences in Bergisch Gladbach, Germany.
Daimler's pledge to reclaim the global premium crown by 2020, underpinned by a savings plan seen as vague, and has "no credibility" so far beyond the CEO's likely tenure, according to DWS, Germany's biggest retail fund manager.