Analysis: Daimler CEO Zetsche unveils his last-chance saloon

Sun Mar 3, 2013 9:18am EST
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By Christiaan Hetzner and Laurence Frost

GENEVA (Reuters) - Embattled Daimler AG boss Dieter Zetsche will this week defend his strategy - and his job - by unveiling a new Mercedes seen as key to the premium carmaker's turnaround.

In his first major appearance since the board extended his contract by less than expected last month, Zetsche will be looking to the CLA compact to fix Daimler's chronic underperformance in small cars, as well as his own management record.

Both objectives face long odds.

Zetsche, 59, is on notice that Europe's luxury laggard must narrow the gap with BMW and Volkswagen AG's Audi by repairing a botched China expansion and winning new buyers for an expanded range of minis and subcompacts.

"Getting China right is critical, and Mercedes also needs to appeal to younger clients - which is why new vehicles like the CLA are very important," said Barclays analyst Michael Tyndall.

"The question is whether management now has the mandate and the wherewithal to realize the opportunities."

The CLA, which debuts at the Geneva car show on Tuesday, is a test of Daimler's ability to shake off a stuffy brand image partly blamed for Mercedes' failure to keep pace with its two main competitors.

Its premiere closely follows the February 21 board decision to trim Zetsche's next mandate to three years from the expected five and swap the manufacturing and truck division heads, in a move seen as improving both men's CEO prospects.   Continued...

Daimler AG Chief Executive Dieter Zetsche pauses during the company's annual news conference in Stuttgart February 7, 2013. REUTERS/Michael Dalder