Nissan and Daimler bosses face up to future

Is the sheen coming off two of the car industry's brightest star managers? Carlos Ghosn and Dieter Zetsche, the chief executives…

Is the sheen coming off two of the car industry's brightest star managers? Carlos Ghosn and Dieter Zetsche, the chief executives of Renault/Nissan and DaimlerChrysler respectively, have followed similar career paths. They both rescued companies that many thought of as irrecoverable, assuring them the top job when their mentors stepped down.

They both took on dual responsibilities, with Ghosn shuttling between Paris and Tokyo to run Renault and Nissan, and Zetsche looking after the luxury Mercedes-Benz brand too. They even spawned cartoon characters: a Japanese Manga incarnation for Carlos Ghosn, and the more homely Dr Z for the Daimler boss.

Now they are in the same boat again as they struggle to retain the trust of investors. And the success that pushed them to the top has come back to haunt them.

Next week DaimlerChrysler is due to lift the wraps on the third big turnround plan for its US arm in the nine years since Germany's Daimler bought it. Last week Nissan surprised investors with a 23 per cent slide in quarterly profit, depressed by sluggish sales in the US and Japan, which knocked more than 8 per cent off Nissan's share price and 4 per cent off Renault's.

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On Thursday, Ghosn soothed investors' nerves by reporting that whatever the problems at Nissan, Renault had met its 2006 target of an operating margin of 2.5 per cent - respectable for Europe's fiercely competitive car sector.

The company reported surging sales in emerging markets, where it is looking to boost sales. However, Ghosn could not deny that Nissan's first profit warning since 1999 was troubling. When asked at Renault's press conference on Thursday whether his credibility as a turnround manager might be at stake, he seemed irritated: he hoped it would be the "last question" about Nissan, which he pointed out had reported a 7 per cent operating margin for 2006.

Last week's profit stumble at Nissan "indicates that Ghosn doesn't have a Midas touch when it comes to the car companies," said Max Warburton, analyst with UBS. "He faces all the same challenges as his peers."

At DaimlerChrysler, Zetsche is facing intense heat over the fate of Chrysler, particularly after two profit warnings in six weeks last year that even he admitted were "unacceptable". Daimler is expected to announce annual losses of €1 billion next week at Chrysler. Many analysts believe Zetsche took his eye off the business unit when he became boss of Mercedes in September 2005.

To Zetsche's dismay, the weak performance has reopened the recurring, bitter debate over whether the then Daimler-Benz should ever have bought Chrysler, which he ran from 2000 to 2005.

For him, much rides on next week's presentation of the turnround plan, dubbed Project X, which is expected to include more job cuts on top of the tens of thousands already achieved under Daimler.