Mercedes seeks model road to recovery

IT could be the most important vehicle launched in the august history of DaimlerChrysler, for the Mercedes maker is pinning more than revenue hopes on the launch of the new S-Class.

The troubled car company is hoping the next generation of the corporate runaround that is its flagship will end the reliability, workmanship and post-sales service problems that have been haunting it.

Insiders say chief executive Jürgen Schrempp has his future tied to the new model. WirtschaftsWoche magazine agrees, saying the launch of S-Class will be a 'defining' moment in his career.

The car will feature 20 technical innovations, from brakes with radar sensors to seats with a massage function and an infra-red night-view system.

About 485,000 S-Class models have been produced since 1998 but their reputation, along with that of the company, has been dragged low by the quality issues that earlier this year led to the biggest-ever recall of Mercs - 1.3 million.

They were not S-Class models, but the reputation of the company is seen to be riding on these flagship vehicles, which start at £50,000 each.

Schrempp, voted one of the worst managers in the world by Business Week magazine last year, knows the company's woes will only abate if its high-end product is seen to be riding out the poor-quality storm.

He sealed the merger of Daimler Benz and Chrysler in 1998, when he told shareholders to 'expect the extraordinary' from the company. He delivered a loss instead, failed to sell more in the US at a time when Japanese sales there were climbing, and is stubbornly clinging on to the loss-making Smart car division.

Redundancies, closure of business units and attempts to dilute the amount of worker representation at boardroom level have made Schrempp feared and hated by many.

Jürgen Grässlin, author of Jürgen Schrempp and the Making of an Auto Dynasty, says: 'Those who know Schrempp know, too, that the Rambo-like manager and the social progressive are one and the same person. Schrempp is a German boss at heart, but an unorthodox one.

'He appears to want to keep as much of the German 'social market's' job security and benefits as he can, but German companies will need to become more efficient and German workers more productive in the short term if he is to do so.'

One insider says: 'The S-Class is still the benchmark for luxury but Mercedes cannot afford to get this new one wrong. More importantly for Schrempp, neither can he.'