DaimlerChrysler Changes CEO

Jurgen Schrempp will step down after 10 years at the top.
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DaimlerChrysler

(DCX)

named Dieter Zetsche to replace CEO Jurgen Schrempp at year-end, saying the turnaround at the struggling Mercedes unit has progressed to the point where the company can make a leadership change.

The Stuttgart, Germany-based maker of Mercedes and Chrysler cars said Zetsche would take the reins Jan. 1, 2006, for five years. He was head of the company's U.S.-based Chrysler group, whose performance in recent years has surprised observers by overtaking the proud Mercedes division, which has been hit hard by manufacturing problems. Chrysler operating chief Tom LaSorda will replace Zetsche as head of Chrysler.

Schrempp had headed the car maker for 10 years and oversaw the 1998 merger of Daimler-Benz and Chrysler.

"The Supervisory Board and Prof. Schrempp are in full agreement that the end of the year 2005 is the optimal time for a change in the leadership of the company," said Hilmar Kopper, chairman of the Supervisory Board of DaimlerChrysler. "The decisions of the Supervisory Board have been made unanimously after a thorough process."

The news came as DaimlerChrysler said second quarter operating profit hit $2 billion, down from the year-ago $2.5 billion but up substantially on the first quarter's $760 million. Earnings rose to 88 cents a share from 69 cents a year earlier, DaimlerChrysler said, while revenue rose 4% to $46.5 billion.

Mercedes-Benz sales were flat in the latest quarter, while Chrysler group sales rose 3%. After a first-quarter operating loss, Mercedes was slightly in the black in the second quarrter, the company said.

Early Thursday, DaimlerChrylser was at $43.97.