Berlin, Munich, Frankfurt, StuttgartAs often was Dieter Zetsche not already in Berlin to talk to the greats of politics. Zetsche has noted more than 20 meetings with Chancellor Angela Merkel, her Head of Chancellery or the Economics, Environment and Transport Ministers in his calendar. It was discreet, details of the discussions remained confidential.
It was about the consequences of the financial crisis, then about the electric mobility, the damming of the diesel crisis or the end of the tormenting arbitration between the federal government and the toll operator Toll Collect. The unspoken formula always applied: What’s good for Daimler is good for the automotive industry. is good for Germany,
The calendar entry on May 28, 2018, nine o’clock, has changed everything. On this warm spring day the must Daimler boss at the new transport minister Andreas Scheuer (CSU) compete, The discreet journey was denied Zetsche this time, a bunch of cameras awaited the Daimler-Boss and his entourage in front of the Ministry.
Dieter Zetsche in the Federal Ministry of Transport
What happens behind the heavy sandstone walls of the building built in 1878 does not remain confidential for long. barn provides Daimler an ultimatum: Zetsche has 14 days to list in how many vehicles an unauthorized shutdown device manipulates the emission control system. Zetsche notes the date for the next rapport. Zetsche’s desire to talk about the future of mobility is rejected by the minister. End of the audience.
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Exactly two weeks later, the Daimler boss drives back to the Ministry on Monday, takes again up the stairs to the first floor, goes past the Secretariat of the Minister and does not turn right in his office, the place for talks at eye level. But left into the conference room, where an oval meeting table and a staffage with European, German and Bavarian flag awaits him. Even the official atmosphere makes it clear: Here is not gekungelt and not cuddled, here is the state against Daimler.
Then Zetsche reports on the models with those emission control systems, which the Scheuer subordinated Kraftfahrt-Bundesamt (KBA) has complained, and presents the numbers of the affected vehicles. Afterwards Scheuer appears before the public: 774,000 mid-range cars of the C-Class, the Van Vito and the off-road vehicle GLC have to be officially ordered in the workshop – and fast. Not intended for the public, Zetsche still gets on the way: There will be investigations into possible further manipulation cases.
Rarely has a company boss in Berlin fallen so quickly in disgrace. From Zetsche, the pop star of the German car industry, the savior of Germany’s most traditional car brand, the Chancellor’s felt favorite manager, has become the new face of the diesel crisis within a few months. Only legal subtleties separate Zetsche and Daimler from the admission that manipulates the emission control of millions of engines, lied to customers and authorities with flattened emissions. A circumstance that Zetsche has always denied.
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The man who led Daimler out of the crisis and the lethargy of descent over the past decade is now being caught up in the omissions of recent years. The designer Zetsche is now a driven. The direction these days have taken over others: the prosecutors in Stuttgart, the traffic politicians in Berlin.
Transport Minister Scheuer and his predecessors wanted to protect Daimler actually. Already at the beginning of 2016, immediately after the outbreak of the diesel scandal VW, the KBA had searched for abnormalities in the exhaust behavior of other manufacturers. Always under the central question: Was the exhaust gas purification possibly switched off unauthorized by other manufacturers in order to simulate cleanliness only on the exhaust test bench?
The officials confronted the manufacturers with the results and hoped for plausible explanations. In the case of Daimler, the KBA experts come across inconsistencies in the C-Class, in the luxury saloons of the S-Class, the Vans of the V-Class and the van Sprinter. At the end of February 2016 they send a draft for the planned publication to Daimler.
Jörg Breuer, Chief of Certification and Regulation, answered the KBA two days later with a “suggestion”: Both the C-Class, the S-Class and the V-Class, and the Sprinter and the small car Smart fortwo the unusual measurement results with the “component protection”. With that exception in the regulation, which allows a temporary suspension of the exhaust gas purification to protect the engine.
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Ergo: The measurement results “confirm the conformity with the 715/2007 regulation”, ie the EU rule, according to which the exhaust gas cleaning may be switched off for technical reasons to avoid engine damage. What was meant to be a narrow exception, in fact, became a huge gap in regulation.
And Daimler has used the gap to the best of its abilities, leaving customers and authorities in the dark about the true emissions. Ethically this is unjustifiable. But was it illegal? The views are different.
“Zetsche has threatened to shower us with complaints if we claim that Daimler has manipulated the exhaust gas aftertreatment,” says a participant of the commission. He is considered by the Federal Ministry of Transport as the “hardest bone in the industry”.
So it left the round at the reference to abnormalities and made clear: “If the manufacturer, as intended, takes action and the KBA is convinced of the effectiveness, doubts about the permissibility of the Abschalteinrichtung for motor protection reasons, no further.” You could also say: At that time, the state power was still scared out of fear of the Daimler lawyers.
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Zetsche and his men stay with their line, but it gets tighter. From the spring of 2017, the public prosecutor investigates Stuttgart against Daimler. Scheuer’s predecessor as Transport Minister, Alexander Dobrindt (CSU), instructs the KBA to examine two Mercedes engine classes in more detail. The KBA in Flensburg and the investigators in Stuttgart are in close contact. The gray zone of “component protection”, the overseers now know, has profoundly exploited Daimler, possibly even crossing the border to the illegal.
Zetsche, who has always denied that Daimler had manipulated, is now in an explanation. Contre cœur he agrees to the mass recall. At the same time, Daimler intends to appeal against the decision. It is a contradictory position: Zetsche in fact complies with the authority that accuses him of fraud. At the same time he insists on being right and not lied to customers and authorities. According to this reading, hundreds of thousands of technically perfect vehicles are now being ordered back to the workshops.
“We have not manipulated.” Zetsche, at Daimler for more than 40 years and at the helm of the group for twelve years, can not help but stick to this attitude. With a confession of guilt Zetsche would hardly keep at the top of the car company. It would be the end of a great career. Perhaps the largest that the German auto industry has ever seen.
1. The renovator
Flashback to the year 2005. Germany was considered a sick man in Europe, and also the oldest car company in the country hung on the ropes. In the middle of 2005 Jürgen Schrempp’s dream of the big world AG had burst. Even the disguised as a merger acquisition of the US carmaker Chrysler had overwhelmed the renamed Daimler-Chrysler group.
Dieter Zetsche and Angela Merkel
The Daimler boss was a frequent guest in the Chancellery and in the Berlin ministries.
Because Stuttgart engineers were assigned to Detroit in company strength to provide development aid there, the quality of the Mercedes core brand suddenly suffered: windscreen wiper motors, poor suspension and inadequate injection technology – the list of complaints is long. As well then Mitsubishi Daimler-Chrysler had finally taken over. Schrempp had to leave.
But instead Schrempps opponent Eckhard Cordes, then head of the Brand Mercedes, Dieter Zetsche gets the job. The then boss of the ChryslerDivision has been credited with saving at least the small version of the World AG and keeping the US subsidiary in the corporation.
Zetsche had actually done the trick at this time to lead Chrysler out of the red. The man with the unmistakable seal-Schnauzer had in the USA hard-pressed and reduced 25,000 jobs. At the same time he was not too bad to appear as a cartoon character “Doctor Z.” in commercials for Chrysler – with a self-irony, which usually does not trust a German in the US, no one.
This was well received in Stuttgart. The alleged renovation of Chrysler secures him the ticket for the chief post. Cordes clears the field.
Even before taking office in January 2006, Zetsche makes clear where he wants to start. “The corporation is still too hierarchical,” Zetsche complains Handelsblatt. The board leaves the corporate headquarters in Stuttgart-Möhringen, mocked by Schrempp as “Bullshit Castle”, and moves on to Untertürkheim for a few kilometers, right next to the main plant.
The message is clear: Daimler is no longer about global corporate and other visions. It’s about finally building good cars again. Zetsche announces the reduction of 8,500 jobs in production and 6,000 in administration. The model range of the loss-maker Smart is slashed, the diesel engine manufacturer MTU sold, the participation in the airbus-Mother EADS reduced. Nevertheless, a quick turnaround is not granted Zetsche. archrival BMW not only sells more cars than Mercedes, Bayern are also more profitable.
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And even Zetsche himself is disenchanted. Because the renovation of Chrysler turns out to be less sustainable. As soon as Zetsche is in Germany, horrendous losses start again at the US subsidiary. In 2007, Zetsche invited Chrysler to Detroit for the annual press conference.
On the spot then the bang: Daimler will in terms of Chrysler “all options examine” – including the sale. Shortly before the world financial crisis Zetsche sold Chrysler to the financial investor Cerberus. A happy coincidence, as Zetsche will confess later. With the ailing US subsidiary on the leg, Daimler would hardly have come through the following recession.
Even without Chrysler it will be close enough in 2009, Daimler threatens to run out of liquidity. Only by entering Abu Dhabi with a billion injection can the worst be prevented. Different to BMW Daimler writes in the crisis a billion loss.
2. The visionary
Dieter Zetsche will not start playing the role of loser until spring 2012. At the Geneva Motor Show he presents the new A-Class. The clumsy car in the form of a minivan was previously considered retiree vehicle, which still lingered the trouble of Elchtests: A Scandinavian car newspaper had found in 1997 that the vehicle could tip over in jerky steering movements.
Now, instead, a flat and sleek city car is on the stage. “A like attack,” smashes Zetsche from the podium. The A-Class puts an end to the bored boredom for the last third of life. The image that has so far adhered to so many Mercedes models.
The prelude to the reorientation was made, but success did not take long. While the developers after the compact A-Class now also refreshed the upper series, Zetsche came under further pressure. The competitors BMW and Audi Zetke’s words have long since led to sales slump, and no one believed that Daimler would be the market leader again in 2020. Mistrust of the man in the lead culminated in a memorable meeting of the Supervisory Board in February 2013.
The workforce staged a coup against Zetsche: he had expected too much of the changes to the employees. Zetsche had launched a savings package over four billion euros, but the sales fell short of expectations. A new boss should come here, demanded the employee representatives in the supervisory board.
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Contrary to earlier statements, they did not want to extend the contract of Zetsche for another five years. Works council chairman Erich Klemm allegedly accused Zetsche of not communicating sufficiently with the employees. In the US, he probably unlearned dealing with the works councils. “Zetsche should go away,” remembers a companion.
But the counted could rely on his network. Chairman of the Supervisory Board Manfred Bischoff jumped to his side. The former Daimler board was already over 70 years old, but understood to negotiate compromises. Bischoff had a moderating effect on the trade unionists. His compromise: Instead of five, Zetsche’s contract was only extended by three years. Now everybody knew: Dr. Z. was a probationary chief.
Zetsche worked for the Swabian company all his life. He never had a Plan B in his pocket. He has learned to be right, to assert himself, to remove opposition from the field. “One should not let emotion guide you – that would be the wrong way,” he said in Geneva. Zetsche, albeit weakened, moves on to the agenda. The criticism of his ability to communicate wipes out as a single opinion: “Changes, no matter in which environment, do not always generate enthusiasm.”
He should be right. The Geneva Motor Show 2013 marks the low and at the same time the turning point. After a tormenting delay, the Daimler tanker finally begins to react to the rudder pressure. The refreshed model range pays off. In the past 63 months, the Daimler sales figures know only one direction: upwards. First will Audi and then the eternal rival BMW overtook. Zetsche can now announce its target, which was announced as unrealistically by industry experts for the year 2020, five years ahead of schedule.
With the paragraph Zetsche also regains his confidence, his performances are broader. To introduce the new S-Class, Daimler has around 500 journalists from all over the world fly into Hamburg. For the presentation, Daimler had specially converted an aircraft hangar from Airbus. Star chefs provide the guests with appetizers – including football icon Franz Beckenbauer. Soul singer Alicia Keys flies in for a short appearance from the USA. Crammed with the latest technology, the luxury model is the “icon of travel,” Zetsche announces in Hamburg. Modest was yesterday.
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The world premiere of the luxury car can cost the group more than ten million euros, true to the new Mercedes slogan “The best or nothing”. The S-Class is an important building block for Daimler to conquer a neglected market: China. Under the mediation of Zetsche, the cooperation with the partner BAIC will be reorganized and the dealer network reorganized. Thereafter, business is booming and every second S-Class has since been sold in China. Daimler records record profits.
Zetsche, it seems, has done everything right. He becomes more relaxed. While wearing a suit and tie in the Airbus hanger, he is now switching his outfit more and more frequently against jeans and sneakers. “I never got warm with this tie,” he confesses in October 2016. And because many of Daimler’s hierarchies are sacred, he prefers to say, “This is not an assignment.”
Zetsche is not only casual, he is also open to change. He returns impressively from a trip to Silicon Valley with a warning: “With new technologies, the top dog of the previous world is typically no longer the future one.” In other words, Daimler has to fight to tackle the future topics of electromobility, autonomous driving and car sharing not to be hung up.
The new competitors are called Tesla, Google and over. Now that the turnaround has been achieved, Zetsche finds his new role as a visionary in 2015 and 2016, inspired by his mission to make Daimler fit for a digital future. The frustration over the dispute with the works council is gone. In a good mood, he comes to the office in most days, reports people from his environment. A secure future also requires appropriate management for the era after him. That’s what Zetsche wants to choose for himself.
He is gathering a troop of younger managers to lead the company. At the top is Ola Källenius, he will once become Zetsches successor. The smart Swede is responsible for sales and then development on the board. Källenius is to receive comprehensive training for his future role as CEO.
Zetsche is at the zenith of his success. He was right with his predictions. Even former opponents like Eckhard Cordes pay him respect. “Zetsche is really a hands-on manager who is very actively involved in the operational business,” said the former rival.
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But with the success disappear the people of Zetsches life who dare to criticize him yet. Wolfgang Bernhard was one of the last uncomfortable companions. Because the head of the truck division can not become CEO, he throws the towel in early 2017. “This is the last one left the table, who has ever raised the floor against the CEO,” says a manager.
Zetsche wants less and less to answer the public’s questions. He rejects requests for interviews more and more frequently. He is looking for the stage, then on his terms. With ready-made statements, he introduces new models and praises the performance of his group. For a while, this attitude is understandable.
How should a manager take journalists seriously who wrote him down for years? Zetsche finally demonstrated with the radical redesign twelve years ago and the turnaround model five years ago that he was right and the others wrong.
But this healthy self-esteem is only a small step away from the hubris of infallibility. At this stage, people overlook warning signals or do not take them seriously anymore. In this hermetically sealed biotope, the diesel crisis for Daimler was able to grow into a diesel scandal – and is now likely to grow into Zetsche’s own personal diesel catastrophe.
3. The driven
Autumn 2015 is changing a lot in the German auto industry. While in Wolfsburg VW-Boss Martin Winterkorn Stumbling over the exhaust fraud, Zetsche lets his engine developers compete. Whether Mercedes engines were also manipulated, wants to know the Daimler boss. Apparently the first assurances are enough, this is not the case. Even with the first inspections of the Federal Motor Transport Authority, Daimler remains clean. “We do not cheat, we did not manipulate exhaust emissions,” says the Daimler CEO at the end of January 2016.
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A bold statement. Shortly thereafter, a class action suit from the USA flutters on Zetsches desk – the US authorities EPA and CARB examine more sharply. “It looks like Mercedes has programmed the affected Bluetec vehicles to be dirtier – like Volkswagen,” says US law firm Hagens Berman, which represents Mercedes diesel customers in the United States.
The plaintiffs’ argument: Daimler advertised its diesel models as being particularly environmentally friendly and clean. At low temperatures, the measured nitrogen oxide levels were on average 19 times higher than allowed in the US. The US Department of Justice comes on board. The Americans gain access to documentation documenting the process of approving diesel engines for the US market.
From now on, Zetsche gets more and more on the defensive. In mid-March 2017, the Stuttgart Public Prosecutor’s Office also begins its investigation against Daimler, the allegations are “fraud” and “punishable advertising”. Offices are searched, documents seized. A little later, the US authorities sue Fiat Chrysler because of illegal defeat devices in their diesel engines.
In the quarterly report, the Group warns its investors: In the event that the US authorities come to the conclusion that Daimler has used similar devices, the Group could face significant fines and recall actions.
At the same time, the group lacks the alternatives to diesel. Daimler has neglected alternatives such as hybrid or electric drives for too long. In March 2016 presented TeslaBoss Elon Musk the “Model 3” – a compact electric car in the size of the C-Class. Within a few days, Tesla sells more than 300,000 units. Meanwhile, Zetsche has moved his electric models further and further back.
In October 2016, then the alleged liberation: At the Paris Motor Show Zetsche introduces the electric brand “EQ”. By 2025, a dozen purely electric models are expected to hit the market. “Now we turn the switch,” Zetsche calls. But the schedules are knitted with a hot needle. The developers are struggling with the launch date of the “EQC”. Although the first electric car will be presented in September, it will not be launched until mid-2019.
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The figures are still correct: For the past year 2017, the Group concludes with a profit increase of 24 percent, for the first time earned Daimler more than ten billion euros net. But the stock exchange let such success reports meanwhile cold. For years, the stock remains far behind the Dax.
A dangerous development, because unlike VW or BMW, Daimler does not have a protective anchor shareholder. In the middle of February 2018, the owner of the Chinese carmaker reports Geelythat already Volvo One of them is to have bought 9.7 percent of the Daimler shares. In one fell swoop, the Chinese is the largest single shareholder. “Nothing completely unusual or world moving” is the Geely entry, trying to appease the surprised Zetsche. It is the understatement of the year.
With Li Shufu, the statics in the Daimler empire changed, even if the new investor humbly. “Daimler is an outstanding company with first-class management,” explained the founder of Geely. But the self-proclaimed “friend and partner” also has a message: “It’s time for a new way of thinking. My involvement with Daimler reflects this vision. “
The new “friend and partner” is well known in Stuttgart. Even before his entry, he campaigned for a cooperation between Daimler and the Geely subsidiary Volvo, Daimler is not very enthusiastic about the offer. Zetsche already has a partner in China with BAIC, and he does not need Volvo either. But the Geely emissaries are pushing hard. There have been several meetings between the Chinese and the Stuttgart, it is said. For a long time, Zetsche would no longer be able to oppose the request of the Chinese, unken industry circles.
4. The endangered legacy
Zetsches contract runs until the end of 2019, he wants to remain at least until the Annual General Meeting on 27 March next year, it says in the Group. Then the shareholders vote on the establishment of a holding company. In the future, Daimler, as the parent company, will be responsible for overseeing three independent joint stock companies: one for cars, one for trucks, one for finance and services. This holding structure marks the completion of Zetsch’s remodeling plans. His work would be done.
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At the same shareholders’ meeting, spurred by once again great numbers, the shareholders are to elect them to the Supervisory Board. If more than a quarter of the owners of the capital vote for it, he could even switch directly to the supervisory board without the two-year cooling-off phase. Only a few months ago, this project seemed to be a self-perpetuity. But now Zetsche has to worry about his exit strategy.
With Geely, Daimler has a self-confident investor who wants to have a say. In the emissions scandal help only legal devices to avoid the admission of fraud. In the US, Daimler lawyers haggle over a billion-dollar settlement with the diesel prosecutors without having to sign a guilty verdict.
In Stuttgart, prosecutors determine who get an ever more accurate picture of the manipulation processes. It is still unclear whether the Daimler case reaches similar dimensions as the Volkswagen case. In the worst case, Zetsche could face a similarly inglorious end as ex-VW boss Martin Winterkorn.
Nobody wants a premature change at the top of the group, it is said in Stuttgart these days. But no one wants to commit.
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