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 told the Reuters news agency.
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Reuters noted that the unit, long a pet project of outgoing DaimlerChrysler CEO Juergen Schrempp, has racked up significant losses since production began in 1998 – last year it was €600 million ($US726 million) in the red, prompting Mercedes to launch a restructuring programme costing it up to €1.2 billion.
The report added that the brand’s previously ambitious growth plans under former chief Andreas Renschler – currently DaimlerChrysler’s head of commercial vehicles – have already been stricken, and under Zetsche, Smart could be robbed of its last remaining independence.
“The new ForTwo [the tiny two-seat city car line] will be built, but the big question is whether there’s a successor model to the ForFour,” the source told Reuters, referring to the five-door subcompact hatchback model built in the Netherlands by Mitsubishi Motor’s Dutch NedCar unit [it shares its platform and some components with the Japanese automaker’s similar sized Colt model line].
With the discontinuation this year of the Smart 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, the news agency’s report added.
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By GlobalData“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 told Reuters.
Smart, which has never posted an annual profit, aims to break even by 2007, the report added.
Reuters said that, 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 of 1,350 are being cut while parts of development such as design are already being integrated into Mercedes, leading to a reduction in the department’s staff by 180 to 360 employees.
Reuters also reported that, in all likelihood, current Mercedes Car Group chief Eckhard Cordes won’t be around to see what happens at Smart.
The news agency’s source reportedly 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 favour of Zetsche was the right one,” the source reportedly said, adding “his behaviour disappoints me.”
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