Mercedes power struggle mars vision of European co-operation

The power struggle at Mercedes, in which Daimler has taken back control, is a missed opportunity for Euro accord, says George Pitcher. George Pitcher is chief executive of issue management consultancy Luther Pendragon

I have recently, for reasons I won’t bore you with, become a Mercedes driver. It’s fine in its way, but difficult to avoid the Teutonic clichés – it is like driving a luxurious tank. The controls are all chunky and clunky. It’s a breeze to drive in town and a bracing wind when you open it up in the country, but there is none of the understated, touch-button electronic sophistication that you might expect on other executive cars of the same class. It is comfortable but fiercely efficient – it has knobs you can get hold of, rather than brush.

Like art, I know little about motor cars, but I know what I like. Mercedes is altogether too staid and stolid as a marque – the entrepreneur drives a Porsche, BMW or Audi. But, fear not, this column is not about to become a pastiche of Jeremy Clarkson. These musings are prompted by what occurred last week at Mercedes-Benz, Europe’s most profitable motor company, rather than by a desire to have a luxury car to test drive on a weekly basis.

There has been something of a power struggle at Mercedes-Benz lately, born of the strategy implemented by Edzard Reuter, erstwhile chairman of parent Daimler- Benz, to diversify into aerospace, electronics and a clutch of other businesses, leaving Mercedes-Benz with a hefty degree of autonomy. Indeed, Helmut Werner, the innovative chief executive of Mercedes-Benz, had constantly to explain that his was a separate company – albeit one that contributed 70 per cent of Daimler-Benz’s sales – and was so keen to keep it so that last week he lost the battle to resist a remerger with Daimler-Benz and had to go.

It remains to be asked why Reuter’s policy of diversification and empowerment of business units, such as Mercedes-Benz, has been reversed. In particular, the issue needs to be addressed since Reuter was widely recognised as one of Europe’s leading industrial brains. The son of a Communist mayor of Berlin, whose family fled to Turkey to avoid the Nazis, Reuter subsequently rose to head one of the most powerful capitalist combines in the Western world.

I visited Reuter in Stuttgart in 1990 and I am reasonably convinced that he saw Daimler-Benz as a microcosm of what was happening on the European political stage. I am, for once, pleased to have given house-room to notes I took at the time. Reuter told me: “We have reached a historic moment at which we could achieve political unity in Europe and, if we miss that moment, it may not return for some time.” Even more chillingly, he warned of a possible return of the kind of nationalism that drove his family to Turkey: “If it runs badly, then the temptations for German nationalism may come up again. I hope not, but history is open to the future and I don’t rule it out.”

At that time, Daimler-Benz was just about to list its shares on the London Stock Exchange and there was talk of Mercedes-Benz sourcing vehicles for the first time outside Germany. It is not beyond reason that Reuter, mindful of what was developing in the European economy with the reunification of Germany, was anxious that the whole of Europe should participate in the process and that his industrial conglomerate should show the way.

Now Reuter has gone and the opportunity, to some extent, has been missed. Mercedes-Benz is to return to the direct management control of Daimler-Benz. With the autocratic Werner out of the way, a triumvirate of Mercedes-Benz executives joins the main Daimler-Benz management board – namely Jurgen Hubbert, head of cars; Kurt Lauk, head of trucks; and Dieter Zetsche, head of sales and marketing.

I don’t for a moment suggest that any of these gentlemen, or any of their colleagues, have an interest in European unity that is at variance with Herr Reuter’s. But it remains a fact that Daimler-Benz is consolidating its industrial and economic strength in Germany.

I remember that, in the Hotel Graf Zeppelin in Stuttgart, Hubbert said of John Major, who had been Prime Minister for less than a month: “I am astonished a little bit. He is a man that is totally unknown.” Plus ça change, as they wouldn’t say in Germany.

Major had inherited a Government that had presided over the sale of Rover Group, the last vestige of British Leyland, to BMW (through British Aerospace) and of Jaguar to Ford. Reuter’s efforts to move the manufacture of Mercedes out of Germany have been more than a little hampered by Britain’s desire to hand great lumps of its motor industry to German ownership and, with Ford’s acquisition of Jaguar, the mass-produced executive car is no longer a British phenomenon at all.

The ousted Werner’s great contribution in the early Nineties was overseeing the engineering and crackingly good marketing of the core, executive sector Mercedes E-Class and introducing niche products, such as V-Class people carriers. With Audi and BMW/ Rover, Mercedes and German-owned motor companies are set fair to dominate the British executive car market, in competition with the likes of Toyota.

None of which is cause for concern – we will drive better cars as a result. But it is worth recording that we not only missed Reuter’s overtures for pan-European co-operation, but actively handed Germany the best part of our market to dominate.

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