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DCX to decide on Smart cars for U.S.
It also mulls small-car joint venture

November 18, 2005



Fortwo was designed for the congested centers of European cities. (Smart)
LAS VEGAS -- DaimlerChrysler AG will decide within six months whether to sell its quirky line of Smart minicars in the United States, incoming CEO Dieter Zetsche said in an interview Thursday.

At the same time, he said, DCX is talking to other automakers about teaming up to develop and build a new B-class car -- smaller than the Dodge Neon but bigger than the Smart -- for sale in the United States.

The next generation of Smart's tiny Fortwo model has been engineered to meet all U.S. safety and environmental standards, he said. Now the company must figure out if it could make money on the little cars in the United States. The Fortwo was developed for chic buyers living in the congested centers of European cities like Munich, Rome and Paris. The new Fortwo should go on sale in Europe in 2007.

Zetsche, speaking the morning after Chrysler Group's North American dealers gave him an adoring send-off at their annual meeting, credited his promotion to head of the Mercedes-Benz car group to the team effort by those dealers and Chrysler's employees in the five years since he took over the Auburn Hills headquarters of Chrysler Group before Thanksgiving 2000.

"I will stay involved with Chrysler," he told the dealers at an elaborate show that included gymnastics by the Cirque du Soleil theater group and a skit in which tuxedo-clad Chrysler executives equipped him for the challenges of his new job with gadgets borrowed from James Bond movies.

Zetsche's appearance concluded with a surprise visit by Bond film star Sean Connery, who looked askance at the lanky, mustachioed German wearing the jetpack to escape hostile meetings.

"Who the hell are you?" the Scottish actor asked. "And why are you wearing all my stuff?"

Zetsche's next mission includes ending Smart's history of billion-dollar losses and fixing Mercedes-Benz's quality problems.

In addition to running the Mercedes car group, which includes Smart and the Maybach ultra-luxury brand, Zetsche becomes CEO of DaimlerChrysler on Jan. 1.

"Mercedes-Benz is the strongest brand" in the auto industry, he said. "Its quality is coming back, though it's not quite where our customers need it to be."

The brand's quality processes had not kept pace with the increased use of electronic systems, shorter development times for vehicles and the growth of its model line to include many new vehicles, he said.

Mercedes also needs to become more productive, he said. The automaker wants to shed 8,500 jobs in Germany, and if it does not, the company's contract with its German union will allow it to reduce hours and pay to its workers, he said.

"Chrysler was basically flat on all four tires," when Zetsche took over in 2000, he said. Mercedes' problems are not that bad, though it needs to be more productive and efficient, he added.

He promised more cooperation among the companies' brands, citing the development of the megahit Chrysler 300 sedan as the model.

"There's great potential, and many more examples to come," including the creation of a single team for advanced engineering of electrical and electronics systems for Mercedes and Chrysler Group.

DaimlerChrysler is also looking for more joint projects with other automakers, he said. The company's new four-cylinder engine -- developed with Mitsubishi and Hyundai Motor Co. -- and the hybrid gasoline-electric system DCX is developing with General Motors Corp., are the first such deals.

"We are working on a number of very specific projects for cooperation with other companies," Zetsche said.

One of those projects could include developing a car smaller than the Dodge Neon for sale in the United States.

"We are having discussions with a number of potential partners," Zetsche said. "There's no agreement, but I continue to be optimistic." Such a small car might be built in the United States, he said.

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