The Daimler chairman with the walrus mustache is one of the few German CEOs that is instantly recognizable. Set to retire after 13 years, he leaves behind a company struggling to be relevant in a digital world.
Where did he come from?
Perhaps surprisingly, the 65-year-old Dieter Zetsche was born to German parents in Istanbul, Turkey, in 1953. His father was there working as a civil engineer and the family soon moved back to the Frankfurt area where Zetsche attended school before studying electrical engineering.
A company man through and through, Zetsche joined Daimler way back in 1976 and quickly worked his way up. At the same time he got his doctorate degree from the University of Paderborn in 1982. Later he would famously use this title in an ad campaign called "Ask Dr. Z."
From mid-2000 to the end 2005 he was in Detroit and ran the "merged" DaimlerChrysler division, before being made chairman of the board of the whole conglomerate on January 1, 2006. Ironically, once at the top he was the driving force behind the 2007 demerger with Chrysler.
Daimler AG, as the newly organized company called itself, now employs around 290,000 people and makes passenger vehicles, trucks and buses. It also has financial services and carsharing arms and for the past 13 years it has been run by Zetsche from headquarters in Stuttgart. Besides taking on these big tasks, he personally heads the Mercedes-Benz car division and is one of the highest-paid employees of a listed German company.
When it was announced late last year that he will retire this May it made headlines. Later when his €4,250 a day retirement package was reported it made even more headlines.
Isn't it all about the motor?
Being an engineer, Zetsche has always been interested in how things work. At Mercedes this usually meant motors and fancy electronic gadgets. At the same time he ushered in technical advances and implemented a new sleeker design across the board that was a real hit with buyers and critics.
In the end though it also meant canceling the ultraluxury high-powered Maybach line after laughable sales and setbacks for the company's Smart car expansion plans.
Then there is the not-so-little diesel problem. After Volkswagen admitted in 2015 to installing software in vehicles designed to help cheat on emissions tests, one carmaker after another started to come clean — some voluntarily, some not. The dieselgate scandal hit a crescendo with reports of collusion among German carmakers, prosecutors searching company offices and threats of driving bans.
Since then tougher European emissions regulations have come into force and some cities have indeed put partial diesel driving bans into place. For Daimler this has also meant massive recalls for software updates and mounting legal costs. Even if battery-powered vehicles were not creeping around the corner, this scandal marks a turning point for the German car industry and suddenly the exhaust pipe seems more important than the motor or leather seats.
What about that mustache?
Long before he landed at the head of the table, Zetsche was known for two things: not wearing a tie and his mustache. With a tie he probably feels naked. Yet it is his fancy facial hair that has had a life of its own and became a star in 2006 with a series of ads featuring Dr. Z. — pronounced "zee" in the American way and not the British "zed" way.
Created by a big advertising company, the campaign was omnipresent in America and Canada. It even had an animated version online. It was supposed to give a kinder face to an anonymous manufacturing company. In the end the campaign was stopped early because drivers didn't get his humor, didn't really like his accent and didn't know he was really the boss and not just a quirky actor.
Regardless of the pushback, Zetsche moved on and has held onto his hairy accessory over the years. It has become part of his brand just like Mercedes' three-pronged emblem. Without it he would surely be nearly unrecognizable.
What about the numbers?
For investors though Daimler's stock price is much more important than ties, motors or mustaches. Traded on the Frankfurt stock exchange and listed on the DAX index, Daimler shares have had a rollercoaster ride since Zetsche stepped in. The day after he took over the helm, a share was worth €43.86 ($49.86). On Wednesday, after the company published its 2018 results, the stock fell and ended the day at €51.95.
Although it was a slight drop after bad news, the stock was miles ahead of its 2009 Zetsche-era low of €19, but still well below its March 2015 high of over €95 per share. True to character, Zetsche is not letting the most recent disappointing fourth-quarter company profits — which fell 49 percent — affect his mood. Instead he points to the overall figures for 2018 in which 3.4 million vehicles including buses and trucks, were sold, an increase of 2.4 percent.
Though overall net profit hit €7.6 billion in 2018, it was a big comedown from the €10.6 billion in 2017 and has forced the company to cut its stock dividend for the year. What's more, the profit-sharing payouts for the 130,000 German workers will fall from €5,700 to €4,965.
But looking to the future, the 2018 numbers don't bode that well for Zetsche or his management style. It was not the Mercedes division which he personally runs that brought in the money; its operating profits fell by 18 percent last year.
Taking a longer view and using Daimler's own performance calculator, those who invested €1,000 when Zetsche took over would now have around €1,200, a 19.05 percent increase, or an annualized return of 1.34 percent. Shooting star share prices look different.
Have we seen the last of him?
Despite the fact that Zetsche's retirement was announced over six months ahead of time, he is no lame duck and still making the rounds and trying to cement his legacy. His last official event will be the Daimler shareholder meeting on May 22 when he hands over the reigns to his Swedish successor, Ola Kaellenius.
He will leave a company suffering from global trade conflicts and a war on diesel, things that are hard to control internally. More importantly, Daimler is a company making slow headway on electric mobility and autonomous vehicles. Big companies have big problems and need big solutions, but it was only six months ago that the Daimler unveiled the EQC, its first all-electric vehicle. To catch the current wave, the company will need to invest billions in new research and development.
But never fear, we have not seen the last of Dieter Zetsche. After a two-year absence he will most likely take over the company's supervisory board when the contract of the current head, Manfred Bischoff, ends in 2021. Until then he can enjoy some time off and wait for his retirement checks, maybe he will also have time to start a band. Then he would really be the real rock star of the German business world.