Reuters reports that Daimler are so smitten with  Dieter Zetsche, they’ve extended his contract until 2013. By then, Zetsche will be 60 years old, and will have worked for Daimler for 37 years. “Promote the insiders” was the cry in Daimler’s headquarters, as Thomas Weber, a board member responsible for group research, also received a contract extension to 2013. In the excitement, Wolfgang Bernhard was elected to a newly-created seat on Daimler’s board of directors as well. But these votes of confidence shouldn’t be taken for granted. Daimler have some big challenges in front of them, chief of which is a lack of scale and cost competitiveness in the compact segment. Herr Zetsche did start talks with Renault, but nothing has come to fruition yet. Another big problem, particularly in the ego division, is that Daimler are falling behind BMW (and, gasp, even Audi) globally and in emerging markets like China and India. It seems that if Dieter Zetsche wants to retire at 60, he’s going to have to earn it.

I’ve been warned before by the B&B not to read too much into the forward-looking statements in SEC filings, especially the ones where companies ruminate over all the things that could still go wrong with their struggling firms. These legal disclosures of worst-case-scenarios often reflect unlikely scenarios and can be downright misleading, so we held off from diving too deep into Tesla’s IPO S-1 filing [complete document here]. Others around the web have jumped in without compunction, and this week has yielded a steady drip of troubling revelations. It’s a wild and woolly collection of issues, but given that people are going to be asked to invest in this nightmare of a company, it’s only fair that we give the grievances an airing.

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VW and Audi combined for a hell of a month, with combined sales up 40 percent. The Beetle is back, kind of, but the Jettas still butter the bread at VWOA. At Audi, the A4/A5/Q5 combo combined for two thirds of the brand’s 6,510 January sales. Subaru‘s Impreza and Forester are a down a bit from their big 2009 numbers, but the new Legacy/Outback duo were up over 100 percent. Mercedes had a strong January across the board, with only the tired SLK, CLK, CL and CLS failing to grow sales. Also, 156 people bought an R-Class this month.

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A strong team is only as good as its weakest link, particularly in the automotive industry. Treat your suppliers well and they’ll play fair by you. Try to screw them and they’ll collapse leaving you with serious production problems. Detroit (Chrysler in particular) had the worst reputation for treating their suppliers badly, but the Pentastar brand now claims to be trying to change all that.

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Smart’s new President, former Saturn overseer/undertaker Jill Lajdziak, knows how the dying brand thing works. With Smart sales down a (barely) Chrysler-beating 41 percent on the year, the Penske-owned Smart USA is teaming up with Daimler Financial Services (Smart vehicles are produced by Daimler in Europe) for a good-old captive lease deal right out the old GM playbook. According to Automotive News [sub], Smart is offering

a 36-month lease for $169 a month, $999 down, a $595 acquisition fee and the first month’s payment due at the time of the lease.

That’s a lot more realistic than the the old deal they were offering ($3k down, $200/month) but we’re still talking about a 10k miles-per-year lease. On a car makes a Yaris seem luxurious, overpowered and confidence-inspiring. Incidentally, were you aware that the Smart ForTwo was first introduced way back in 1998? The more you know!

More than a year ago, TTAC reported top-level attempts of a cooperation between BMW and Daimler. At the time, we didn’t give the cooperation big odds. Our educated prediction: As much as the heads of the automakers may desire mutual aid, middle management and especially the engineers will torpedo any tête-à-tête. “If you think South Korea and North Korea have communication problems, then you should be in a meeting between Daimler and BMW engineers,” was our analysis (based on input of people who have been in those meetings.) And we wrote: “Currently, Daimler and BMW don’t share much more than common pain.”

Supposedly, they kept talking. They could agree to joint purchasing of parts, but even that didn’t progress beyond less than lofty goals. Projects which promised savings of hundreds of millions, such as the joint production of transmissions and engines, went absolutely nowhere.

Now, Der Spiegel reports that all talks about possible jointness between Daimler and BMW have been called off. “There are no new meetings,” said a top manager to Der Spiegel. “There is nothing to talk about.” (Read More…)

People have a refound appetite for luxury vehicles, decided Daimler. Their workforce in Sindelfingen is working full-time. Wonders of wonders: They even brought temporary workers back. All this as per the Frankfurter Allgemeine Zeitung [sub] in Germany. Reason for the sudden Benz boom? (Read More…)

Daimler’s Dieter Zetsche arrived at NAIAS with his left arm in a sling. What happened? Too much arm wrestling with unions or suppliers? Nah, that would be the right arm. Turns out, Dr. Z was injured by a woman. On the ski slopes in Austria, a female snowboarder had crashed into Zetsche. Left shoulder fractured. Dr. Z wore a helmet, which avoided more serious damage.

Germany’s BILD Zeitung reports that doctors at the Austrian hospital prescribed at least 6 weeks of strict convalescence. Says BILD: “Daimler’s boss ignored them. He popped some pain killers, flew to Detroit with shoulder and arm bandaged. Courageously, he presented the new Mercedes products.”

If you hear a loud screeching noise coming from the Stuttgart area, that’ll probably be Dieter Zetsche berating his Asian management team. The Economic Times of India reported that the Mercedes-Benz marque has lost its leadership of the luxury car segment in India to BMW after nearly ten years on top. Daimler also posted a 10.43% decline in sales in India, as volume fell to 3,247 units (if that doesn’t seem like much, consider that Mercedes also trails BMW in China by about 60k units to about 90k). And just like that, out come the excuses: “We are behind BMW in 2009 because of limited availability of our E-Class car … I don’t want to focus on leadership. We want to have a profitable growth,” Mercedes Benz India Managing Director and CEO Wilfried Aulbur told reporters. “We see a very strong growth in 2009 and it will be a blockbuster year for us. We are very bullish and we expect, it will be a high double-digit growth.”
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When I did my first work for Audi in the 70s, competing with BMW or (gasp) Mercedes-Benz was considered a cruel joke. The brand was thought ideal for high school teachers or tax collectors, who kept their hats on while driving. What a difference a few decades make. Not to forget the money a rich sugar daddy called Volkswagen can sink into the brand.

Audi CFO Axel Strotbek told the German Handelsblatt that VW will pour €7.3b into Audi, from now to 2012. “80 percent is earmarked for developing new product,” Strotbek said. The money will go to a noble cause:
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VW CEO  Martin Winterkorn is a superstitious man. He doesn’t want to add a 13^th brand to his (or rather Piech’s) large collection. (Coincidentally, 12 is the number of Piech’s children. More or less. Nobody is quite sure,) “There are some who knock on our door. Some really want to come under our roof as they see we’re on a good path strategically. But we are satisfied with the current line-up,” Winterkorn said to Wirtschaftswoche.  Specifically questioned about Volvo or (gasp) Daimler, Winterkorn answered: „There are many who would like to snuggle in VW’s cozy bed. Thank you, not interested.”  Instead, he’s re-thinking the line-up of his new acquisitions:  “I could imagine a smaller Cayenne derivative. Or a Porsche below the Boxster. This is under discussion.”
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Remember when Japan’s Nikkei said: “The latest round of partnerships is widely seen as just the beginning of a major shakeup of the auto making industry?” A kind of Japanese company, Renault (partner of Nissan) is engaged in heavy petting with yet another partner.

Reuters says French carmaker Renault is in talks with Daimler and others about partnerships. Areas covered include engines, transmission platforms, and access to new technologies, Renault COO Patrick Pelata confirmed today. He added: “We are discussing serious matters with Daimler.”
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Automotive News China [sub] reports that Mercedes believes its Chinese-built cars are every bit as good as its German-built models. Ulrich Walker, Chairman and CEO of Daimler Northeast Asia says:

Yes, our cars here are exportable. There is no difference in quality with those made outside China.

But, as Bertel Schmitt reports, demand for luxury cars is strong enough in China that we won’t be seeing “Beijing, China” as the point of assembly on US-market Mercs.

After writing about Spyker transferring production from the Netherlands to the United Kingdom, I thought I’d seen it all. Well, now I have. Production going OUT of Germany and into the United States. After much debating, Daimler have finally decided to switch some production from Germany to the United States. According to Reuters, roughly a fifth of Mercedes-Benz C-Class models will be built in Alabama by 2014, in hopes of protecting against currency fluctuations and maintaining profit margin. Naturally, the unions weren’t happy, in fact they downed tools in protest, claiming it was a “blatantly wrong decision.” Dr Z saw it differently, especially considering the move is said to be worth $100m in incentives from the state of Alabama.

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Autocar reports that the next-generation of Smart city car is being co-developed by Daimler and Renault. The rear-engined platform is being described as “modular,” with variable wheelbase and track, and will underpin the next Smart ForTwo and ForFour as well as several Renaults. Initially Mercedes will provide three-pot engines with six-speed manual and seven-speed dual-clutch transmissions. Eventually, the two firms will develop a series of 1.8 liter engines to power the ForFour, as well as the new Mercedes A and B classes and future Renault Twingo, Clio, Modus, Mégane and Scenic models. Both firms plan EV and hybrid versions as well, although the firms have not decided which will lead development of these drivetrains… which can’t be a good sign for Tesla which has a Smart electrification contract with Daimler. Equally undecided is whether Nissan will get a version to match up with Toyota’s iQ. In any case, it’s become clear that what began as a unique-platformed, niche brand was going to have to change. By sharing costs, developing a viable four-seater on the same platform and offering advanced drivetrains, Daimler may just be able to pull Smart’s fat from the fire.