Chrysler's New Boss

UBURN HILLS — Thomas W. LaSorda's ascension to CEO of Chrysler Group is fast-tracked to Sept. 1. Today's announcement will see current CEO Dieter Zetsche take over as head of Mercedes Car Group at that time.

Zetsche, 52, fills a gap created by the Aug. 31 resignation of Eckhard Cordes after 29 years and unfulfilled expectations he would succeed Juergen Schrempp as chairman of DaimlerChrysler AG.

The management board last month passed over Cordes in choosing Zetsche to succeed as chairman, beginning Jan. 1, at which time LaSorda, 51, was to take over as the new head of Chrysler, with Eric Ridenour, 46, as his chief operating officer. Both men now begin their new duties Sept. 1.

Zetsche is expected to continue to oversee Mercedes after he assumes the chairmanship in the new year, while an internal search continues for a Mercedes successor.

When LaSorda, a native of Windsor, Ont., Canada, takes the helm, his ride should prove much smoother than the last North American to hold the post.

That was Jim Holden, also born in Windsor, whose automotive career fell into an irreversible tailspin in 2000 when a $512 million third-quarter loss led to his unceremonious firing Nov. 12, upon landing in Stuttgart to present a 3-year business plan.

Holden was replaced by Zetsche, who was dispatched from Germany to restructure the ailing Chrysler.

LaSorda, in his first major press conference since news of his appointment, recognizes the advantages of reporting to a well-known and likeminded boss in Stuttgart.

As part of Zetsche's turnaround team, LaSorda was charged with cutting manufacturing costs while improving overall efficiency. Bonds were formed, and their informal relationship is expected to continue.

Conversely, Holden reported to Schrempp who was in the middle of a media maelstrom following what was described as a public admission that it was Schrempp's plan, all along, to take over the former Chrysler Corp. and reduce it to a business unit.

Zetsche takes to the mother ship his knowledge of Chrysler's inner workings and products along with an understanding of the North American market.

Holden struggled to make the point to European bosses that record demand and sales co-existed with incentives in North America, and failure to offer them was financial suicide.

Zetsche is expected to have a hands-on leadership style and spend more time in the U.S. A Schrempp sighting was rare in Detroit during his tenure.

The business plan Holden never got to present called for a paring of the 5-year product planning budget to about $35 billion from $49 billion, for an auto maker with about $70 billion in revenue.

Zetsche went further, cutting it to $32 billion.

LaSorda vows to maintain similar discipline and keep the product budget in the $28 billion to $30 billion range. “I don't want to go back to the old days when we spent too much,” LaSorda says. “We went through a lot of pain.”

It also goes against his personal DNA, says the incoming chief.

LaSorda says he will build on the solid foundation Zetsche established over the past five years and the momentum created by hot products.

His job will be to oversee the launch of at least 10 new products in 2006, making it the most ambitious single-year rollout to date.

It will start with new C-segment compact vehicles and include new cars for the larger D-segment, as well as a healthy mix of trucks, SUVs and cross/utility vehicles.

By the ‘08 model year, the average age of the lineup will be less than 2 years old, from 3.8 years to 4 years currently, LaSorda says, and his stamp will start showing up on some of the offerings.

There are no plans to be in the smaller A- or B-segments for the foreseeable future, LaSorda says. There were studies conducted into producing a B-segment vehicle in China, but that idea has been dropped.

“I don't think we're ever going to be done on the cost side,” LaSorda tells reporters, after a lengthy discussion here that touched on the rising cost of health care and materials.

Ultimately, product decisions will fall to LaSorda as CEO.

After 28 years of launching products for two companies (Chrysler and General Motors Corp.) on two different continents (North America and Europe), LaSorda says he will not shy away from the task at hand.