http://today.reuters.com/business/newsArticle.aspx?type=ousiv&storyID=2005-09-02
T112316Z_01_EIC241011_RTRIDST_0_BUSINESSPRO-AUTOS-DAIMLERCHRYSLER-ZETSCHE-DC.XML

New Mercedes boss plays down idea of ditching Smart

Fri Sep 2, 2005 7:24 AM ET

FRANKFURT (Reuters) - DaimlerChrysler's (DCXGn.DE: Quote, Profile,
Research) designated Chief Executive Dieter Zetsche expressed
confidence in the future of loss-making minicar business Smart as he
took over personal control of Mercedes Car Group.

"I am extraordinarily optimistic that Mercedes Car Group is on a fast
track higher. I am equally optimistic that we will make progress with
Smart along the way," he wrote in a memo to staff of the
German-American automaker's premium car division.

"We have brands that are the envy of the entire industry, we have
products that we can rightly be proud of, and we have in all areas
staff whose competence and ability is second to none," he added.

The company released the letter on Friday, a day after Zetsche left
U.S. arm Chrysler to run Mercedes for an unspecified period.

He replaces group CEO Juergen Schrempp at the turn of the year as well.

Mercedes Car Group includes the Mercedes-Benz, Smart and Maybach luxury
limousine brands.

The financial community is watching eagerly to see what steps Zetsche
has in mind for Mercedes, whose operating profit has plummeted amid
model changeovers, a strong euro, spending to fix quality problems and
hefty losses at Smart.

The market wants to know whether Zetsche, 52, will simply tinker with
predecessor Eckhard Cordes's plan to revive Mercedes profits and
margins by cutting costs and boosting revenue, or whether he will take
a more radical approach.

Some analysts have suggested pulling the plug on Smart, which has not
made a profit since its debut in 1998 and is slated to break even only
in 2007 despite sweeping job cuts and a narrowing of the quirky city
car's model lineup.

It lost nearly 4,000 euros on each car sold last year.

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