Daily Edition: Jan. 25, 2006

January 25, 2006

DC Cutting Jobs at Home; Chrysler, Benz to Grow Closer

Some European reporters still refer to the German-American automaker as "Daimler-Chrysler." But in a press conference this morning, CEO Dieter Zetsche told reporters and analysts, "Today, you can eliminate that hyphen."

Zetsche says that with the restructuring announced this morning, his management team is taking steps to integrate DaimlerChrysler even further-committing to a "new management model" with streamlined processes to unleash DaimlerChrysler's potential and profitable growth. Consolidation will occur at all levels, from Zetsche on down, as his title of head of the Mercedes Car Group is officially combined with his CEO duties. Along with similar moves with other roles, DaimlerChrysler's board will officially shrink from twelve to nine members.

To cast the management revamp in stone, Zetsche says the DC Board of Management will move its headquarters in May of 2006 to Untertuerkheim from Moehringen, though some support functions will stay in Moehringen. With the move, the company's official headquarters will be in Untertuerkeim, the spiritual home of Mercedes-Benz and Auburn Hills, home of the Chrysler Group. "We want the board to be where the action is," Zetsche said.

In describing the changes he hopes to make on the notorious infighting corporate culture at Mercedes-Benz, Zetsche was blunt. By moving the board into the factory, Zetsche says the new company is all automotive. "We all drive the cars at night and see what kind of progress we are making," he said. "This is the kind of culture we want to have - no bullshit, no politics."

Much of the reductions will involve head count at Mercedes as well as realignments in its truck and bus divisions, which will be split into a truck group, while vans will be put under the Mercedes Car Group aegis. DC hopes to effect a net savings of $1 billion annually from the combination of cuts and merging the back offices of the car and truck groups. However, the cuts will be painful at home, where DaimlerChrysler says it will eliminate 6000 jobs, reducing its management ranks by 30 percent. The personnel cuts will take three years and two billion Euros to complete.

The cuts will mean one thing for Chrysler Group: bringing it "markedly closer" to its German sister company. For example, research for all DC car divisions will be merged into Mercedes Car Group. Zetsche hinted that the lessons of companies likeToyota had influence in streamlining his business, but "ultimately it's a change we need ourself." -Marty Padgett

Zetsche Era Begins at DC by Joseph Szczesny (1/2/2006)
Cordes, Schrempp, even Hubbert are history as Germany watches carefully.


Zetsche Determined to Finish Merger

Chrysler Group CEO Dieter Zetsche

Chrysler Group CEO Dieter Zetsche

Dieter Zetsche, DaimlerChrysler's chief executive officer, seems bound and determined to finish off the job started by Juergen Schrempp and turn the German-American automaker into one big car company.

His plan to revamp the company's management team calls for concentrating all of the company's far-flung research and development activities under the Mercedes-Benz Car Group. Thus, the Chrysler Group's vestigial advanced research and development unit will now be absorbed in the new Mercedes unit. More significantly, perhaps, the extensive research capability that DaimlerChrysler has maintained outside the car groups also will be absorbed into Mercedes-Benz.

Zetsche said cooperation between the Mercedes Car Group and the Chrysler Group will become markedly closer. However, he stressed that he isn't about to sacrifice Mercedes' hard-won reputation as one of the world's top luxury brands in an effort to reduce costs. "A clear priority within this effort will continue to further strengthen brand identity," he said.

The DaimlerChrysler CEO also said the old idea of platform-sharing is already fading in the industry. The new model is more like Legos, where certain modules or building blocks can be shared, he said. If the block doesn't change the perception of the vehicle, it might be found on both Chrysler and Mercedes vehicles. But if the module means something to the customer then it will be differentiated, Zetsche said.  "We want to turn scale into profitability," he said. "You can expect to see more examples of collaboration, especially when we can transfer knowledge between the groups, such as when the Chrysler Group tapped the rear-wheel-drive expertise of Mercedes-Benz in the development of the Chrysler 300C," he said.

Zetsche also stressed the flexible development system should allow DaimlerChrysler to produce more unique vehicles.

In addition, instead of just having departments devoted to certain kinds of research, DaimlerChrysler plans to use "project houses," Zetsche suggested.

"You will also see more examples of clearly defined 'project houses' where engineers from different divisions work together for the benefit of the whole company," he said.

The joint venture in Troy, Mich., that is working on hybrids is a good example that the collaborative model can work, he said. In Troy, Mercedes-Benz and Chrysler engineers are working side-by-side with General Motors and BMW specialists to develop hybrids. A second example inside Chrysler is the collaboration on the world's cleanest diesel technology, called BlueTec; that joint effort is being undertaken by Commercial Vehicles, Mercedes Car Group, and Chrysler Group. More project houses are in the works, he added. -Joe Szczesny


Ford Continues Way Forward Without Lyons

Steve Lyons - FORD

Steve Lyons - FORD

Ford Motor Company is taking more steps this week to execute the Way Forward plan it announced on Monday morning. Chief among them is a round of executive changes that will remove Steve Lyons as the vice president of Ford marketing, sales and service for North America, a move TheCarConnection reported last week. Lyons will retire and will become a Ford dealer in Arizona. His replacement is Cisco Codina, who had served as Ford's customer service vice president. Codina reports directly to Mark Fields, President of the Americas and one of the architects of the Way Forward plan. Darryl Hazel, late of Ford marketing and Lincoln Mercury, will take over Codina's former duties and will report to him in the new management lineup. And replacing Hazel in his marketing slot will be Al Giombetti in a new role which will combine marketing and sales for all three Ford domestic brands. As a result of the changes, Ford says it will reduce the number of corporate officers by four.

Ford "Way Forward" Arrives by TCC Team (1/23/2006)
The real challenge begins after the cuts are made, analysts say.


TCConfidential: How About A Free Jag?

2004 Jaguar X-Type side front

2004 Jaguar X-Type side front

What sort of incentives do you expect when you sign on the dotted line for a property? Perhaps a freezer or a dishwasher. But how about a Jaguar? That's the amazing deal one real estate firm is offering when you buy a residential, retail, or commercial unit. You could even get a fleet of cars; the small print reveals if you opt for a full office floor you get ten X-Types. It's certainly one way to shift the slow-selling sedan. You're waiting for the catch, aren't you? We'd love to tell you there isn't one, but… you have to buy the property in the Arab Emirate of Dubai, and the company behind it, Damac, says it will only deliver the Jag there, too. Still, you could always ship it home. -Richard Yarrow

More in TCConfidential


WJR Auto Report: Ford's Way Forward

The Way Forward turnaround plan Ford presented on Monday outlined a dramatic transformation at the number two automaker, including 14 plant closings and the elimination of perhaps 30,000 jobs. Yet the announcement was surprisingly short on some details. Only three of seven assembly plants were named. TheCarConnection.com has learned Ford officials will soon reveal plans to also close one of their Mexican assembly lines, and another in St. Paul, Minn. Meanwhile, Ford officials hinted at plans to expand into new market segments, and they even had a couple clay models next to the podium. But insiders say that specific details were cut from the speeches at the last moment. We think we can fill in a few of those blanks. Look for Ford to build its Fairlane "people-mover," an interesting alternative to the traditional minivan. It will also bring over a version of the European Ford Focus, a much more modern and well-equipped vehicle than the American subcompact sharing that name. Even more new products will start appearing in the months to come.

Read more on Ford's Way Forward with NPR


NASCAR Sets "Car of Tomorrow" Launch for 2007

While the news that Toyota will be joining NASCAR's Nextel Cup and Busch series in 2007 got the majority of ink on Monday's first day of the annual NASCAR Media Tour in Charlotte, another announcement was made that will have a much larger impact on the sport.

For five years, NASCAR has been working on the development of a new specification of chassis that it calls the "Car of Tomorrow." NASCAR announced on Monday that the CoT will be phased into competition over a three-year period starting in 2007, and the new car will obsolete the millions of dollars' worth of rolling stock that currently occupy racing team garages. It is, simply, the biggest change in NASCAR's hardware in 40 years, since the move from unibody stock cars to tube-frame chassis.

Without overwhelming you with a plethora of details, suffice it to say that the CoT is bigger, boxier and safer. The driver will sit three inches further back and four inches further toward the center of the car, reducing the possibility of injury from side impacts. The car is four inches wider and two inches taller than the current car, and more "crushability" is built into the sides of the car, offering further protection.

The car is designed to be less aerodynamic than the current model, with a more-upright windshield that increases drag and a larger and boxier front bumper that catches rather than deflects air.

NASCAR says that, after the initial expense of building new cars, teams will save money in the long run because the CoT is designed to be flexible in its application on the different types of tracks. Currently the top teams require about 17 different cars to run a season, with unique chassis for superspeedways, intermediate, short, and road-course tracks, and further specialization in some cases for particular tracks (i.e., a "Bristol" car, a "Darlington" car). With the CoT, NASCAR says that a team can downsize its inventory to about ten cars per year. The CoT is designed to have very adjustable aerodynamics with a rear wing and bolt-on/-off front splitters and the frame rail locations are exactly specified, which will allow a single car to be used at a variety of tracks by adjusting the wing and splitters.

Another benefit of the CoT, according to NASCAR, will be closer competition. Current-day cars suffer from "aero push" on the longer ovals due to their slick aerodynamics, making passing difficult. The CoT is designed to minimize "aero push," and will hopefully bring back the door-to-door racing and slingshot passing maneuver that were so popular in the 1970s.

The plan is for the CoT to be required in 16 events during 2007, at Bristol, Phoenix, Martinsville, Richmond, Dover, New Hampshire, Darlington, the fall race at Talladega (the last restrictor-plate race of the season) and road-course races at Infineon Raceway and Watkins Glen. In 2008 26 events will be added, including both races at Daytona, California, Pocono, Michigan, the spring event at Talladega and Indianapolis. Teams will run the entire 2009 schedule with the CoT, adding both events at Atlanta, Lowe's Motor Speedway and Texas, plus events at Chicagoland, Kansas, Las Vegas, and Homestead. The three-year rollout is designed to somewhat minimize the financial impact to the teams by allowing them to "use up" their existing chassis.

If you follow the sport at all, you know that NASCAR machinery has moved closer and closer to a "spec" car over recent years and that they have almost nothing in common with their street-car counterparts other than headlight and taillight decals and grille treatment. All NASCAR cars have carburetors and rear-wheel drive while their street-car counterparts are fuel-injected with front-wheel drive, and all NASCAR cars resemble two-door coupes, while the Ford Fusion and Dodge Charger are available only as four-door sedans. The switch to the CoT will do nothing to change this, and the manufacturers will have to be content with the same small amount of branding identification, or perhaps a little less, as they have today for their estimated $75-million annual contribution to the sport. Whether that is enough to keep their interest (and funding) remains to be seen.

The bottom line is that it will probably make little difference to the millions of fans who pack the grandstands and tune in on television. Oh sure, there will be grumbling from the old-timers and "purists," just as there always has been when changes have been introduced, and the teams will no doubt be unhappy with garages full of obsolete cars and having to build all-new rolling stock, but if in fact the cars are safer, racing is closer and long-term expense is less, this will all be just another milestone in the history of the sport. -John F. Gardner


FROM THE SOURCE headlines from the latest press releases


With tons of dirt and a dose of speed, the corner of

Paradise Road
Sahara Avenue
will be transformed in spring of 2006 when General Motors opens the doors of "The Drive," a unique hands-on driving experience that will be the first of its kind within the United States. Featuring two professionally designed driving courses - including a high performance loop and an off-road adventure over a dirt terrain -The Drive will provide a unique "autotainment" experience adjacent to the Las Vegas Strip. The land to be utilized for the facility will be leased by General Motors from the Sahara Hotel & Casino. For the duration of the project, GM will also be a marketing and advertising partner of the Las Vegas Monorail Company including having the only brand presence at the monorail station at the Sahara Hotel & Casino - currently the most northern point of the Las Vegas Monorail system.


Name Symbol Last Change
Autobytel, Inc. ABTL 5.07 +0.08 (+1.60%)
Autoliv Inc. ALV 49.14 -0.06 (-0.12%)
AutoNation Inc. AN 22.05 -0.11 (-0.50%)
ArvinMeritor Inc. ARM 16.55 +2.84 (+20.71%)
American Axle & Mfr. Holdings Inc. AXL 18.86 +0.43 (+2.33%)
Ballard Power Systems Inc. BLDP 4.85
BorgWarner Inc. BWA 56.45 +0.29 (+0.52%)
Cummins Inc. CMI 94.47 +1.07 (+1.15%)
Dana Corporation DCN 4.41
DaimlerChrysler AG (ADR) DCX 54.84 +2.60 (+4.98%)
Dura Automotive Systems DRRA 2.19 +0.01 (+0.46%)
Eaton Corporation ETN 66.23 +0.44 (+0.67%)
Ford Motor Company F 8.40 +0.08 (+0.96%)
General Motors Corporation GM 23.05 +1.20 (+5.49%)
Gentex Corporation GNTX 19.87 +0.28 (+1.43%)
Goodyear Tire & Rubber GT 18.21 +0.25 (+1.39%)
Honda Motor Co. Ltd. (ADR) HMC 27.80 +0.06 (+0.22%)
Johnson Controls Inc. JCI 70.36 -0.54 (-0.76%)
Lear Corporation LEA 25.12 +0.89 (+3.67%)
Magna International Inc. MGA 71.56 +0.41 (+0.58%)
Motorola Inc. MOT 22.55 +0.37 (+1.67%)
Nissan Motor Co. Ltd. (ADR) NSANY 21.78 -0.13 (-0.59%)
Sonic Automotive Inc. SAH 23.32 +0.36 (+1.57%)
Siemens AG SI 85.00 -0.13 (-0.15%)
Sirius Satellite Radio SIRI 5.90 -0.21 (-3.44%)
Toyota Motor Corporation (ADR) TM 104.05 +0.64 (+0.62%)
TRW Automotive Holdings TRW 24.52 -0.03 (-0.12%)
Tower Automotive Inc. TWRAQ.PK 0.066 -0.004 (-5.71%)
United Auto Group Inc. UAG 38.97 +0.90 (+2.36%)
Visteon Corporation VC 4.97 +0.11 (+2.26%)
XM Satellite Radio Hold. XMSR 27.30 +0.08 (+0.29%)
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