Money Matters - Simplified

Dailmer chief Schrempp to quit by year end

&nbsp

DaimlerChrysler AG Chief Executive Juergen Schrempp, whose 1998 takeover of Chrysler Corp. created the world’s fifth-largest carmaker, will step down on Dec. 31. The company’s stock had its biggest gain in three years.

The news came as the company reported improved second-quarter earnings and a slight rise in sales.

The company also said Eric Ridenour will take over for LaSorda.

The company that emerged from Schrempp’s 1998 attempt to create a global auto giant has struggled, first with heavy losses at the Chrysler division and now with weak earnings at former cash cow Mercedes.

Mr Schrempp has characteristically met criticism from shareholders with temper flares and a somewhat arrogant defence. When quizzed over the disappointing performance of the Smart brand in April this year, he shrugged off the question in an outburst of anger, saying it represented only a small proportion of the group’s total revenues.

"Schrempp’s stepping down should absolutely be seen as positive for DaimlerChrysler," Juergen Pieper, an analyst at Metzler Bank, told Reuters. "Schrempp has made too many poor strategic decisions in the past. Zetsche should bring a breath of fresh air."

Mr Zetsche, 52, helped turn around Chrysler, America’s third-largest carmaker, at a time of fierce competition in the US. The German manager will be the group’s chief executive for five years, after which Chrysler’s chief operating officer, Thomas LaSorda, will take over.

News of Mr Schrempp’s departure came as Daimler announced second-quarter profits of € 737m, compared with € 577m a year earlier.