Schrempp has won the power struggle but lost the support of his managers

Stuttgart. Last Tuesday at the DaimlerChrysler Innovation Symposium Mercedes boss Juergen Hubbert talked about vehicle safety; Chrysler CEO Zetsche about fuel alternatives and commercial trucks chief Eckhard Cordes spoke about accident prevention.

No one mentioned the current turbulence around Mitsubishi Motors Corporation (MMC) and the demotion of Wolfgang Bernhard just two days before he was due to become Hubbert's successor.

Cordes' talk on accident prevention was in accordance with D/C boss Juergen Schrempp's order to the board of directors and his press department: Show unity and don't give out any information about Bernhard to outsiders.

Schrempp's directive is: If Daimler has no positive news then it should not get any headlines at all.

Hubbert and Cordes left the event center not long after their speeches. Only Zetsche stayed to have a chat. He said that his second-in-command and friend Bernhard's dismissal is "very disappointing."

Bang! Another accident had happened and another negative headline was written. What has been denied time after time is now obvious: The board of directors is disunited and Schrempp's authority is dented.

Meanwhile Schrempp is trying hard to calm the turmoil by sending a letter to employees. He states in the letter that the group's Asia strategy is unchanged, that the group will keep its MMC shares and that Chrysler and Smart projects are not under threat.

"I will stay until 2008," Schrempp said in an interview last week. He has enough work to do. He has to prevent his executives from rebelling yet again. And he has to finally solve the group's problems, especially in Asia.

DaimlerChrysler's rejection of MMC raises a few questions: how will the group's market share in Asia increase to 25 percent from the current 7 percent? At the moment Mercedes and Chrysler autos are only niche products in the Far East.

Willi Diez, head of the Institute for the Automotive Industry and a former DaimlerChrysler manager, said that Smart needs to become a global brand.

Schrempp recently ordered an investigation into whether Smart production in China would be reasonable.

He has also just received the go-ahead for the production of both Mercedes C-class and E-class cars in China starting at the end of 2005. However, the joint venture with Beijing Automotive Industry Holding Co. is only a drop in the ocean.

"The planned 25,000 vehicles a year can only be the beginning," warned Fredrik Westin, auto analyst at WestLB.

The problems at Chrysler have not been sorted yet either. Not to mention the question: Who is now going to replace Juergen Hubbert?

Hubbert -- Mister Mercedes -- will leave by the end of April 2005, as originally planned.

Smart boss Andreas Renschler; Mercedes sales director Joachim Schmidt and Ulrich Walker, former second-in-command at Mitsubishi, are possible successors.

Officials said that the odds for an external manager taking over the post are very small.

Wolfgang Reitzle, a former top BMW executive and now CEO at Linde, has made it clear that he is not interested in the job.

Bernhard's dismissal resulted in turmoil within Chrysler's board of directors at Auburn Hills.

"It was a dirty trick," one manager said angrily. "Why did neither Schrempp nor Hubbert, Fleig or Kopper warn Bernhard, that he might be made redundant?"

Only Zetsche seems calm. The Chrysler boss knows that since Bernhard is gone he is indispensable -- at least for the time being.

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