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German automaker extends CEO's contract, shuffles other top executives

By: David McHugh, The Associated Press

Posted: 02/21/2013 10:07 AM | Comments: 0 | Last Modified: 02/21/2013 12:21 PM

Dr. Dieter Zetsche, Chairman of the Board of Management of Daimler AG, in Detroit, on Jan. 14, 2013. THE CANADIAN PRESS/AP, Paul Sancya

FRANKFURT - Automaker Daimler AG has extended the contract of its chief executive, Dieter Zetsche, giving him at least three more years to narrow the sales and profitability gap between the company's Mercedes luxury brand and competitors Audi and BMW.

Zetsche, whose contract was due to run out in December, also heads Mercedes, Daimler's earnings mainstay where profit margins have recently fallen short.

The Stuttgart-based company said Thursday it will also have two other top managers swap jobs. Wolfgang Bernhard moves from head of operations at Mercedes to head the company's truck division. Truck division head Andreas Renschler will move to Bernhard's former job at Mercedes.

The board also extended the contract of Thomas Weber, head of group research and Mercedes development, until the end of 2016.

Zetsche has vowed that Mercedes will retake the lead in luxury car sales by 2020, and the company is launching a number of new models over the next several years to achieve that.

Daimler as a whole made net profit of €6.5 billion ($8.57 billion) last year but saw Mercedes profit margins — the gap between a car's price and what it cost to make — slip behind its luxury competitors. Mercedes sales slipped 7 per cent last year in China, previously a strong driver of growth. The company also says earnings for the entire group this year would only be about what they were last year.

Stefan Bratzel, an auto analyst at the University of Applied Sciences in Bergisch Gladbach, said Daimler's board of directors was sending a message both that "Zetsche has their trust to achieve the company's goals, and that the company has to get closer to these ambitious goals."

Bratzel said the job switch between Renschler and Bernhard was not unusual and that each one would bring expertise from his previous job to the new post.

Board Chairman Manfred Bischoff said in a statement that the extensions for Zetsche and Weber provide "important continuity at the top executive level."

"The long-term orientation of the group's leadership is an essential factor for Daimler's sustained success. ... Dieter Zetsche and the Board of Management have a clear plan how to further enhance Daimler's overall performance together with their team."

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