Meet Jurgen HubbertHow Daimler's savvy car chief views the Chrysler fit

STUTTGART - So much for the myth that German engineers are hide-bound, by-the-book technical zealots who think they're above, and oblivious to, their peers elsewhere.

Dispelling that notion is personable, slim, sandy-haired Jurgen Hubbert, 59, who in the merged DaimlerChrysler AG remains as head of the pivotal Mercedes-Benz Car Div. He's ultimately responsible for the design, engineering and manufacturing of all cars carrying the Mercedes Tristar.

His mission now is to mesh Mercedes' expertise with that of Chrysler, splitting responsibilities where that makes sense, retaining some things unique to each and working jointly on future vehicles.

Long a close associate of co-chairman Juergen E. Schrempp, Mr. Hubbert's box among the 16 men on the new DaimlerChrysler management board organization chart is somewhat misleading. He's the guy with the key to the technology vault and, arguably, protector of the Mercedes brand.

Mr. Hubbert joined Daimler-Benz AG in 1965 and has led the car division since 1987.

He has a head start in assuming his new role. He speaks "American English" fluently and already has a keen sense of what Chrysler is all about. He's also fired up about the future of the merged companies after leading Daimler-Benz in a series of iconoclastic product ventures that have produced the Smart Car, A-Class commuter car, M-Class sport/utility vehicle, lower price yet appealing new C-Class and E-Class models and the all-new S-Class arriving in March (see New Wheels p.123).

In a lengthy WAW interview, Mr. Hubbert says that DB's recent product flurry, much of it into unconventional territory, probably would not have been tried under Daimler-Benz's stodgy old management. Successful for decades, that regime eschewed new ideas percolating among young staffers. Two studies, one Mr. Hubbert completed in 1989 and another by MIT in 1990, forewarned that DB had to change.

He uses the previous-generation S-Class, introduced in 1991, to illustrate that point. "The philosophy at the time was to build the best car ever built" regardless of cost. The result was not only a chunky, heavy car but also a pricey one at a time when Toyota was launching the excellent Lexus series to meet Mercedes head-on, even cloning its designs.

"Lexus started with a comeptitor for our E-Class in 1991 at $31,000 and we were at $49,000. Today Lexus is at $50,000 and E-Class is still $49,000," he says. "We were stagnant in revenues and our costs were increasing. If we hadn't changed and began operating in a different way, there would still have been a takeover, but it would have been the other way with power on the other side."

The changes haven't been accepted without criticism. "German journalists don't like the Smart. They don't understand it. They have the same mindset we had 10 years ago," he observes.

Free of major competition for decades, except possibly from BMW, DB was in no rush to zero in on cost-cutting. That ended in the early '90s when the company installed meaningful cost targets, bringing its factories up to world-class levels, reinforcing its lead in electronics, introducing new powertrains and generally moving into high gear. "We've had cost reductions in the high double-digit range," he boasts.

Chrysler's cost-driven style and speed-to-market focus should dovetail neatly with DB's emphasis on technology and managing brand image, he says. "We already have smart air bags and diesel technology, so why should they add those? On the other hand, they have electric car expertise that we don't have."

Mr. Hubbert's observations on a variety of key topics:

n Joint Vehicle: The first vehicle combining talents of both partners could arrive in three years, after they digest what's already on their plates. No plans have been set, but such a vehicle might be designed for developing markets, quite possibly using Chrysler's plastic-body expertise. "If we go into emerging markets and have to build something new - let's talk about India, China or somewhere in Asia - it could be quite possible to create a new brand, or take some of our existing brands and develop a common product for Far Eastern Markets." Neither company has a major presence in Asia today.

n Executive Salaries: What Chrysler's top brass gets paid is a matter of public record, but not so DB's. What's known is the Americans make considerably more. How will that gap be narrowed? Although he'd welcome a raise, Mr. Hubbert hopes his financial package doesn't receive wide publicity. "In the small town where I live, if I went to the market after someone had said I made $20 million or whatever, they'd destroy my house. It's much different in Germany - much lower than what the big managers make in the United States, and therefore we have to find a way of organizing this over time."

A four-part scheme is being considered. It includes base salary, personal results, so-called "phantom" stock and a stock option plan, he says. In short, U.S.-style remuneration.

n Future Mergers: Although DB recently cut a deal with Nissan Motor Co. Ltd. on the heavy-truck side, Mr. Hubbert says that's as far as it goes. But an Asian link may still be in the cards. "First we have to make this merger work," he says.

n Technology: Daimler already has a major fuel-cell effort well under way, so Chrysler is halting work in that area while concentrating on electric cars. "We will work together on these technologies. We will run a fully functional fuel-cell car in 2004 - and not just a few, but some thousands." By 2010-2015, fuel-cell powered cars could reach a 10% to 20% market share, he predicts. Right now, though, costs for comparable power, when weighed against existing internal combustion engines, are up to 100 times higher.

Daimler also will lead on the diesel side, where it has been traditionally a dominant player and where Chrysler has little experience. That opens Daimler diesels for any number of Chrysler vehicles. And an all-new diesel V-8 is coming next year.

n 1999 forecast: Mercedes expects to reach a record 850,000 sales worldwide in 1998. Is 900,000 possible next year? "It could come to that point," he says.