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Zetsche to head Mercedes and DaimlerChrysler

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Reuters / August 18, 2005 FRANKFURT -- Chrysler group CEO Dieter Zetsche, set to run parent DaimlerChrysler on Jan. 1, 2006, will take charge of its struggling Mercedes Car Group on Sept. 1, DaimlerChrysler said on Thursday. Current Mercedes chief Eckhard Cordes, who was passed over in the race for the group chief executive job, is leaving the world's fifth-biggest carmaker at the end of August at his own request, the Stuttgart-based company said in a statement. Under the accelerated switchover, Daimler said Chrysler group COO Tom LaSorda will move up to CEO on Sept. 1, four months earlier than first planned. Zetsche's taking control of Mercedes had been well flagged in the German media, but may last far longer than the time it would take simply to find a permanent replacement for Cordes. "It can be somewhat longer term, perhaps even more than a year," a company source said on condition of anonymity, but he added a search was already on for an internal successor. Zetsche, 52, "wants to stabilize the situation at Mercedes. He wants to restore calm. He wants to tackle the challenge of (loss-making minicar unit) Smart and the whole quality issue and wants to continue on the path that has been started down," the source said. Cordes, 54, took over at Mercedes in October after heading the commercial vehicles business. He quit when the carmaker picked Zetsche last month to replace Juergen Schrempp, who shocked markets with news that he would leave at year's end. Respected for engineering a successful turnaround at Chrysler, the walrus-moustached Zetsche inherits a problem child in Mercedes, which is battling to restore its traditional role as the company's cash cow. The company has forecast a slight rise in 2005 unit sales at Mercedes Car Group -- which includes the Mercedes-Benz, Smart and Maybach limousine brands -- as it rolls out new models. Grappling with the strong euro, model changeovers, hefty losses at Smart and costs of fixing embarrassing quality problems at Mercedes-Benz, the unit plunged to a first-quarter operating loss of 954 million euros ($1.17 billion) -- its first red ink since an annual loss in 1993. It returned to a small operating profit of 12 million euros in the second quarter despite taking more charges to restructure Smart, the urban minicar that has lost money since its debut in 1998. The profit collapse prompted a new efficiency drive that aims to boost earnings at the division by more than 3 billion euros and restore an operating margin of 7 percent by 2007.

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