Dieter Zetsche

The rise and fall of Mercedes man

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I'm comfy here. Source: DPA [M]

Daimler’s sudden profit warning has sent the company’s CEO Dieter Zetsche, its investors and the industry into a spin.

Last week, the carmaker announced that sales of Mercedes-Benz were likely to be lower due to a tax expected on the import of US vehicles into China. Shares in the industry plummeted on the news.

That ended a bad week for the industry. Audi’s CEO, Rupert Stadler, was arrested in relation to a Dieselgate investigation into whether cheat devices were being fitted into the VW subsidiary’s cars. As the scandal claims ever more senior scalps, these are scary times for auto industry bosses. Is Dieselgate the work of a few rogue engineers, or a systemic, endemic problem for the industry?

The pressure is on managers to prove their cars are clean but that’s been the mantra of Daimler boss Dieter Zetsche, who was forced to repeat this at the transport ministry. He was recently summoned to answer questions about when cars would be refitted, then forced to recall 774,000 cars. That followed a previous recall of 238,000 vehicles in Germany, after authorities identified illegal switch-off functions.

Daimler plans to appeal, but the rude summons from the ministry was a shock for Mr. Zetsche. A top car boss, he spent forty years at Daimler, at the top for 12, overseeing record sales in the US and China. In the good times, he was celebrated like a pop star and a king of the German economy.

The love flowed and Mercedes sold like hot cakes. By 2014, business writers were singing his praises, calling him the most impressive manager this country has ever seen. They celebrated his progress from sales manager to development chief to CEO, his revamp of the brand, his turnaround of Chrysler, his vision and his eye for detail. Though they couldn’t decide whether his fluffy mustache reminded them of a walrus or a sea lion, he could apparently do no wrong.

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Mr. Zetsche seemed set to glide onto the end of a glorious career when he retires in March next year. Then his luck turned: Dieselgate came knocking.

The appointment with the transport minister in itself wasn’t unusual – over the years, Mr. Zetsche often met the chancellor and her ministers to talk about e-cars, tolls, or visions he had for the future. And the government was happy: what worked for Daimler worked for the country, it seemed.

That was the fruit of his meteoric career. After studying electrical engineering, he started at the company in 1976. His achievements included fixing Chrysler’s fortunes – though later, the acquisition of the carmaker from the United States turned out to be troubled. He rescued the dusty image of the Mercedes A-class. He made cuts, streamlining the company headquarters and preparing it for the future. And he made Daimler a symbol of innovation, premium quality and stellar engineering.

Of course, he had his crises. After his wife had died in 2010, he withdrew and grew isolated. At other low points, his career progress was uncertain. In 2013, he clashed with the head of labor at the company, Erich Klemm, over cuts and strategy. Mr. Klemm, who represented Daimler employees, complained that Mr. Zetsche was often surly and had lost touch with the grassroots “after having spent so many years at Daimler.” The labor leader persuaded the supervisory board chief to only renew Mr. Zetsche’s contract as CEO by three years rather than the usual five.

Then Mr. Zetsche’s luck turned for the better. The people around him noticed him changing, saying he had learned from the darkest chapters of his life. “He is listening again,” said a close colleague.

Later, as Daimler kept hitting its targets and breaking sales records, others accused him of being distant and arrogant. Detractors said perhaps that was when things might have gone wrong.

Some saw him as a tough nut, and said regulators were possibly as afraid of him as they were aware of how crucial the car industry is to the German economy. But to the public watching the TV in their living rooms, Mr. Zetsche seemed like a good-humored guy, especially after he branded himself as Doctor Z in Chrysler ads. At heart, he is a down-to-earth engineer, a fan of Sudoku, cycling and sailboats, happy to chat with workers in the canteen.

This bumpy track taught Mr. Zetsche how to handle the highs and lows. From the tough times, he said, he knew that “when things are going well, don’t be arrogant. And when things aren’t going so well, don’t jump out of the window.”

He may need that hard-earned wisdom in the coming weeks and months.

Daniel Delhaes covers politics for Handelsblatt; Markus Fasse writes about the auto and aviation industries, Martin Murphy covers corruption and cartels and Martin Buchenau covers the economy for Handelsblatt. To contact the authors: fasse@handelsblatt.comdelhaes@handelsblatt.com,   buchenau@handelsblatt.com and murphy@handelsblatt.com

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