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Business

Schrempp Remains DaimlerChrysler Boss

Squelching rumors of a change in company leadership, the supervisory board of German automaker DaimlerChrysler has backed CEO Jürgen Schrempp at a meeting in New York.

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Schrempp's global vision has been questioned.

In a surprise announcement, DaimlerChrysler officials also said that Wolfgang Bernhard would not succeed Jürgen Hubbert as the head of the Mercedes Car Group on May 1. Hubbert will remain in that position until further notice.

The Frankfurter Allgemeine Zeitung newspaper had reported earlier that Schrempp tendered his resignation when the company's supervisory board turned down his plan to support DaimlerChrysler's troubled Japanese partner Mitsubishi Motor Co. earlier this month.

The supervisory board extended Schrempp's contract by three years to 2008 this month. On Thursday, board members said Schrempp had their full support, according to company officials.

Board of management members Eckhard Cordes, responsible for Asia, and Rüdiger Grube, who is in charge of strategy, reportedly both supported Schrempp and also offered to quit.

"Schrempp's vision of a global carmaker has failed, and we wouldn't be unhappy to see him go," Michael Schneider, a fund manager at Deka in Frankfurt, which holds 13 million DaimlerChrysler shares in its portfolio, told Bloomberg News.

The 59-year-old Schrempp has been the main driver of Stuttgart-based Daimler's global ambitions and was the architect of its merger-cum-takeover of U.S. auto company Chrysler in 1998. But the American car market has been caught in a vicious price war and DaimlerChrysler's market value has been cut by half over the past six years. Daimler spent $36 billion to buy Chrysler and $2.2 billion for a 37 percent stake in Mitsubishi.

Resignation to be discussed?

A DaimlerChrysler spokesman told the Reuters news agency that reports about Schrempp's resignation were "nonsense," but a company source said on Wednesday "one could assume" his offer to quit would be a topic at a board meeting in New York on Thursday.

The board's consultations come after the carmaker presented its earnings for the first quarter. The company said in a statement that profit fell by one-third after it took a writedown for a German truck-toll joint venture. Net income fell to €393 million ($465 million) from €588 million in the same period last year. Sales fell 3.9 percent to €32.4 billion from €33.7 billion.

Investors have cheered the decision to end support for Mitsubishi, but it leaves DaimlerChrysler's Asia strategy in tatters. Exacerbating the situation, the South Korean carmaker Hyundai Motors is also planning to drop all cooperation projects with DaimlerChrysler.

According to media reports, Hyundai chief Park Hwang-Ho is irked at the Chinese expansion plans of Mercedes-Benz, a subsidiary of DaimlerChrysler. The move would affect a major planned alliance between DaimlerChrysler and Hyundai Motors to jointly build heavy trucks and the yearly delivery of 50,000 truck engines to Hyundai.

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