FRANKFURT -- Mercedes Car Group's money-losing Smart microcar arm could find its independence under threat with the appointment of Dieter Zetsche as DaimlerChrysler's chief executive, a supervisory board source said on Monday.
Long a pet project of outgoing Daimler CEO Juergen Schrempp, the unit has racked up significant losses since production began in 1998. Last year alone it was 600 million euros ($726 million) in the red, prompting Mercedes, the luxury car division of Daimler, to launch a restructuring program costing it up to 1.2 billion euros.
The brand's previously ambitious growth plans under former chief Andreas Renschler -- currently head of commercial vehicles at Daimler -- have already been stricken, and under Zetsche, Smart could be robbed of its last remaining independence.
"The new ForTwo will be built, but the big question is whether there's a successor model to the ForFour," the source said, referring to the brand's subcompact built in the Netherlands by Mitsubishi Motor's Dutch NedCar unit.
With the discontinuation this year of the brand's diminutive roadster first launched in April 2003 and the decision not to build the planned ForMore compact sport utility vehicle, dropping the ForFour would leave the marque with just its tiny ForTwo in its range.
"Whether it would still be necessary then to have a separate Smart development centre instead of just integrating development entirely with Mercedes is questionable," the source said.
Smart, which has never posted an annual profit in its existence, aims to break even by 2007.
As part of the rescue plan, roughly a third of the 2,100-strong workforce would be cut. In its headquarters at Boeblingen, 600 jobs out of the 1,350 are being cut.
Parts of development such as design are already being successively integrated into Mercedes, leading to a reduction in the department's staff by 180 to 360 employees.
CORDES TO LEAVE
In all likelihood, current Mercedes Car Group chief Eckhard Cordes won't be around to see what happens at Smart.
The source confirmed recent reports that the Mercedes chief and staunch ally of outgoing DaimlerChrysler CEO Juergen Schrempp wanted to resign after losing out to Chrysler chief Zetsche in the ensuing race to replace him.
"It's no secret that Cordes is going. Everyone would like to see him stay and such a job certainly doesn't grow on trees, but if Cordes wants to play the insulted liverwurst, it shows that the decision in favor of Zetsche was the right one," the source said, adding "his behavior disappoints me."