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Departing Daimler CEO leaves successor with big challenges

media He may be back, this time to head up Daimler's supervisory board TT News Agency/AFP/File

Daimler boss Dieter Zetsche is to bow out from the Mercedes-Benz maker's top job next year, with the veteran chief executive leaving a long list of problems for his Swedish successor to tackle.

Zetsche will "step down from his positions in the board of management of Daimler AG and head of Mercedes-Benz Cars, effective at the end of the annual shareholders' meeting" on May 22, 2019, the group said.

He will be replaced by fellow board member Ola Kallenius, the German group's first foreign CEO in over five decades.

Flamboyantly-moustachioed Zetsche broke with many of the staid codes of corporate Germany, often making public appearances in jeans and Converse sneakers and managing to come off as "cool, self-deprecating and convincing," business daily Handelsblatt judged earlier this year.

The affable exterior conceals the heart of "the best salesman in the country," the paper added.

Observers credit Zetsche with skilfully managing Daimler's 2007 divorce from Chrysler after their 1998 merger proved unsuccessful.

Since then, Daimler's books have prospered under Zetsche's leadership, with net profits last year of 10.9 billion euros ($12.8 billion) on revenues of 164 billion euros.

Trained as an engineer, "he's seen as someone who thinks very well strategically, but is also assertive about getting things done," expert Stefan Reindl of car industry institute IFA told AFP.

After becoming head of Chrysler in 2000, Zetsche convinced unions to accept 26,000 job losses and six factory closures to turn the business around.

As for the reasons for his departure, "there's no kind of crisis forcing (Zetsche) to leave now," Reindl said.

Shares in Daimler fell slightly on the announcement, losing 1.3 percent to trade at 54.03 euros by 12:20 in Frankfurt (1020 GMT) -- compared with a DAX index of leading German shares which was down 0.1 percent.

- Bumps in the road -

Nevertheless, Zetsche will relinquish the wheel at a time when his historic firm finds itself in rough terrain.

In the wake of Volkswagen's "dieselgate" emissions cheating scandal, Daimler was forced this year to recall some 774,000 vehicles to undo illegal "defeat devices" designed to conceal high levels of harmful emissions from regulators' tests.

Along with competitors Volkswagen and BMW, Daimler is also the target of an in-depth cartel probe announced last week by the European Commission.

Brussels aims to uncover whether the three firms along with VW's high-end subsidiaries Audi and Porsche agreed not to compete with each other on anti-pollution systems for both diesel- and petrol-powered cars, undermining competition and air quality.

And European authorities have recently imposed tough new emissions tests for cars and are tightening fleet-wide emissions targets for carmakers.

At home, driving bans are looming in German cities for many older diesel vehicles over missed air quality targets.

Meanwhile Mercedes' answer to government and public demands for less polluting cars is still some way off, with its first all-electric SUV, the "EQC", not slated for release until next year.

Further into the future, it faces the demands of higher research spending in fields like self-driving vehicles-- and must find a response to projected lower demand as more people opt for services like car-sharing.

- Musical chairs -

Over the two years from May, Zetsche will have to watch from the sidelines his successor Kallenius' response to the challenges Daimler faces.

Colleagues hope to make him head of the group's supervisory board from 2021, when present chief Manfred Bischoff retires -- but he must first sit out a two-year cooling-off period.

Swedish-born Kallenius joined Daimler in 1993, rose to the executive board by 2015 and has headed research and development for Mercedes-Benz cars since 2017.

He is just 49 years old, compared with 65-year-old Zetsche, and has worked both at Mercedes' Stuttgart HQ and its British and American operations.

"In Ola Kallenius, we are appointing a recognised, internationally experienced and successful Daimler executive," Bischoff said in a statement.

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