The biggest casualty of the shake-up is expected to be its president, Thomas Stallkamp, a former Chrysler executive. To counter charges that the overhaul amounts to a German coup, two Daimler executives are also likely to lose their board seats.
Jurgen Schrempp, the company's joint chairman and chief executive and the architect of last year's $36bn takeover of Chrysler by Daimler-Benz, has made no secret of his intention to streamline the board. It is currently made up of 10 Daimler and seven Chrysler executives and is expected to be reduced to between 10 and 13 executives.
However, Mr Schrempp and his co-chairman, Bob Eaton, are anxious not to upset the delicate balance between German and American executives. Nor do they want to undermine all the work that has gone into welding together two very disparate corporate cultures and overcoming the initial friction caused by the big differentials in pay between the two halves of the business.
In addition to Mr Stallkamp, who led a cost-cutting initiative within Chrysler before the merger, Ted Cunningham, head of Latin American sales, is also expected to go. The two Daimler executives tipped to depart are the group's head of personnel, Heiner Tropitzsch, and the head of its commercial vehicles division, Kurt Lauk.
One New York analyst said yesterday that if Mr Stallkamp was shown the door it would amount to the "decapitation" of the group's US network which would unsettle other senior Chrysler managers and further rattle US investor confidence.
Since the merger, the proportion of shares held by US investors has shrunk from 44 to 25 per cent. At the same time, the shares have fallen by more than 20 per cent. Against the German Dax, DaimlerChrysler shares have underperformed by 16 per cent. Yesterday they fell another 3.5 per cent to 64.4 euros.
When the merger was unveiled in May last year, it was presented as a marriage made in heaven - a combination of Daimler's dominant position in the prestige car and truck markets and Chrysler's strength in light trucks and pick-ups, exemplified by its Jeep brand. Geographically they were also complementary, with Daimler strong in Europe and Chrysler well-represented in North America.
There would be no plant closures or job losses among the 421,000-strong workforce. Moreover, the enlarged group would be able to expand its model development programme. That much has held good. DaimlerChrysler intends to invest $49bn by 2001 on new products and introduce 64 new passenger cars and commercial vehicles by 2004.
DaimlerChrysler now expects to lift group revenues this year to $155bn. The higher forecast is based on a 12 per cent increase in sales in the first eight months of the year when it sold a total of 2.8 million cars, minivans, utility vehicles and trucks.
John Lawson, motor industry analyst with Salomon Smith Barney, says the industrial rationale for the merger remains largely intact. "They do not have much to answer for on that score.... The problem is that the financial targets are not being met, not because the synergies aren't there but because of the general industry background."
The strength of the US car market is partly explained by manufacturers' generous discounts and sales incentives. But these threatens profits and help explain DaimlerChrysler's pedestrian financial performance.
DaimlerChrysler has also been held back by two particular factors - a slowdown in Chrysler's Latin American business and losses at Daimler's Smart car manufacturing operation based in France.
There are now widespread doubts about DaimlerChrysler's ability to meet its target of 10 per cent earnings growth. With worries about a weakening US car market and difficulties in the truck markets of Turkey and Brazil, the management uncertainty is not calculated to help.
But there again the group is hardly in crisis. Sales of Mercedes and Smart cars are forecast to exceed 1 million for the first time this year. As one Commerzbank analyst in Frankfurt said: "We don't think the merger is in disarray but it's somewhat less positive than we were thinking."Reuse content