BUSINESSWEEK ONLINE : SEPTEMBER 25, 2000 ISSUE
INTERNATIONAL BUSINESS

Here a Truck, There a Truck (int'l edition)


Cars aren't the only area where Jurgen E. Schrempp is on the move. He has turned the commercial vehicles division over to protege Dieter Zetsche, 47. DaimlerChrysler is the world's largest truckmaker, selling 555,000 vehicles a year under the Mercedes-Benz, Sterling, Setra, Freightliner, and Thomas Built brands. And thanks to a string of deals negotiated by Zetsche, it's reinforced its presence in North America and taken a foothold in some of the world's fastest growing markets.

One of Zetsche's first tasks was to boost DaimlerChrysler's presence in Asia's expanding markets, where the company now generates just 2% of its $26.9 billion in truck sales. In June, he and fellow board member Eckhard Cordes negotiated the purchase of 10% of Hyundai Motor Co. The $428 million deal includes the establishment of a joint truck venture. And now that DaimlerChrysler is taking control of its Japanese partner Mitsubishi Motors Corp., Zetsche may end up with Mitsubishi's small-truck business, too. Volvo, DaimlerChrysler's archrival in trucks, has an agreement to acquire 20% of Mitsubishi's truck business. But it may not be able to see it through, given the Germans' stronger presence on the Mitsubishi board.

Zetsche has also gone after targets in North America. In July, DaimlerChrysler became the world's biggest manufacturer of truck engines with the $423 million acquisition of Detroit Diesel Corp. In the same month, Zetsche concluded a $432 million agreement to buy Canadian truckmaker Western Star Trucks Holdings Ltd.

But just being the biggest isn't the goal. ''Size in itself is not necessarily an advantage,'' says Zetsche, the former head of sales and chief engineer of the car division. ''You [must] translate it into economies of scale.'' Thus the cabin for the Brazilian-built Mercedes-Benz 1938 S is built in Germany; the Freightliner truck business uses Mercedes diesel engines that are made in Germany and Brazil; and the Sprinter van, a hit in Europe, will be sold by Freightliner in the U.S.

It's rough going now in North America, where overall truck sales have plunged 20% from last year's peak levels. But Zetsche is sticking to his target of pushing profitability above last year's 4% of sales. If he makes it, he'll be assured of a place on the short list of candidates to succeed Schrempp.

By Christine Tierney in Frankfurt

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