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Last Updated: Friday, 19 August 2005, 15:59 GMT 16:59 UK
New boss bolsters DaimlerChrysler
Dieter Zetsche
Dieter Zetsche poses with the Jeep Hurricane earlier this year in Detroit
Shares in DaimlerChrysler rose 2.9% on Friday on news that its new boss would expand his role to run the ailing Mercedes division as well as the group.

Dieter Zetsche, who has been running the Chrysler unit, was appointed last month to replace Juergen Schrempp as group chief executive.

The 52-year-old German is reported to have a talent for turning firms around.

"This is very positive," said one fund manager. "They have found just the right man."

Rocky road

Last month the world's fifth biggest carmaker, which has been battling to attract customers and boost sales, announced that Mr Schrempp would leave at the end of 2005.

Investors had questioned his plan to expand globally at a time of fierce competition and waning consumer demand.

It would be too much for one man if he did not have a deep understanding of the car businesses and didn't know Mercedes, but Zetsche knows both
Ferdinand Dudenhoeffer, analyst

He came under fire from investors when Daimler's merger with US firm Chrysler was not an immediate success and when the carmaker had to pull out of an expensive partnership with unprofitable Japanese rival Mitsubishi Motors.

His replacement, Mr Zetsche, is credited with turning around the struggling Chrysler business in the US. He joined Daimler-Benz in 1976.

Though he is not set to replace Juergen Schrempp until the start of next year, he will take personal charge of the Mercedes division from next month.

Dieter Zetsche's rise to the top has not gone down well with every board member, however.

Eckhard Cordes, 54, another company veteran who ran Mercedes, quit the group when he failed to get the top job himself, leaving the troubled Mercedes division in the lurch.

As a consequence, despite the fact that his contract runs through until the end of 2008, Mr Cordes will get no severance pay.

Future unclear

Meanwhile, car analysts are unfazed by Mr Zetsche's extra responsibility at Mercedes.

"It would be too much for one man if he did not have a deep understanding of the car businesses and didn't know Mercedes, but Zetsche knows both," said Ferdinand Dudenhoefeer, analyst at B&D Forecast.

But analysts are divided on whether Mr Zetsche will stick to Mr Cordes's existing strategy to kick-start Mercedes by cutting costs and boosting revenue, or launch a more far-reaching shake-up.

"Zetsche is not a man who changes everything and starts afresh. He is a man who has known the Mercedes and the DaimlerChrysler organisation his whole life," said analyst Ferdinand Dudenhoeffer.

"He was not at war with these people, just the opposite."

Another analyst, however, had a different take on the future of Mercedes.

"I don't think Zetche is the kind of manager that is just going to inherit an incumbent plan and not alter it significantly," said Adam Jonas at Morgan Stanley.

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