DaimlerChrysler set to replace US head

The supervisory board of DaimlerChrysler is expected to replace James Holden, the head of its troubled US division, at a meeting on Friday, exactly two years after the merger that formed the German-US car giant, company sources said yesterday.

The supervisory board of DaimlerChrysler is expected to replace James Holden, the head of its troubled US division, at a meeting on Friday, exactly two years after the merger that formed the German-US car giant, company sources said yesterday.

Dieter Zetsche, the head of DaimlerChrysler's commercial vehicle unit, is expected to replace Mr Holden. Mr Holden is expected to resign, the sources said. DaimlerChrysler declined to comment last night or to say where the supervisory board meeting would take place.

Mr Holden's resignation and replacement by Mr Zetsche would be the latest in a string of changes at Chrysler. A number of US executives have been replaced by German colleagues since Daimler-Benz bought Chrysler in 1998 for $36bn (£24bn).

Analysts noted that tension between the US and German operations would be exacerbated if Mr Zetsche brought a team with him from Germany to replace another tranche of top management, a scenario which they thought likely.

The US operation, the former Chrysler, has been under increasing pressure since it reported a $512m loss in the third quarter. Rising US incentives and bloated costs have led some analysts to question whether the division will return to profitability in the fourth quarter, as executives have promised.

Daimler-Benz and Chrysler completed their merger, to high expectations in November 1998. But its shares have slumped since peaking at a little over $108 in New York in January 1999. They rose 1 cent to close at $46.40 yesterday, slightly above their year low of $42.40.

The Detroit News reported yesterday that DaimlerChrysler's chairman, Jürgen Schrempp, was becoming increasingly concerned that Mr Holden was losing control of the North American unit, which typically accounts for more than half of DaimlerChrysler's operating profits.

Mr Schrempp was caught off guard by Chrysler's announcement last month it would scale down production at seven of its assembly plants for a week, company sources said. The announcement came a day after Mr Schrempp promised analysts a fourth-quarter turnaround at Chrysler.