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Shake-up at Mercedes-Benz?

IT has not been a good week for Germany's Mercedes-Benz with the announcement that the firm is stopping production of its second new model because of worries over safety. The boss of Mercedes's parent company Daimler-Benz Jurgen Schrempp is reportedly furious at the delay in the launch of the Smart car, coming just a matter of weeks after similar problems with the new A Class.

The failures have been front page news in Germany and have been major blow to the Mercedes image of safety and efficiency - particularly in the wake of the extensive coverage of the death of Diana, Princess of Wales in a Mercedes in Paris earlier this year. In addition investors are worried about the collapse of the Asian car markets as a result of the recent economic troubles in the Far East.

The announcement of the delay in the Smart car program resulted in a 6% drop in the Daimler-Benz share price and there were rumors in Germany that Schrempp may dismiss Mercedes-Benz chief executive Jurgen Hubbert, one of the biggest supporters of the Mercedes F1 program.

Schrempp is famous with Daimler for canceling weak projects and he is known to be less than happy with the lack of success with the F1 engines. Mercedes has not achieved the results it has hoped for in F1 after five years with Sauber and McLaren. To date the engines have scored only three wins - all this year - and two of them were fortunate victories.

Mercedes-Benz has two years to run on its five-year McLaren contract but it is widely felt that the 1998 season will be the team's last real chance. There is, however, much optimism at McLaren with the arrival of Adrian Newey and Bridgestone tires.

The switch to Bridgestone is a big risk for the team but one which may well pay off. This year the Bridgestone tires were more competitive than the Goodyear rubber at several races although the Bridgestone teams failed to make the most of the advantage. If McLaren can produce a reliable car in 1998 it could win four or five races this year thanks to the tires - even if the car is no big improvement. If the car is considerably better than the MP4-12, as the team hopes, then there will be more victories. If things go wrong Bridgestone can take the blame for the failure, which will deflect attention from the poor performance of McLaren and Mercedes.

Whether this will be enough to convince Schrempp remains to be seen...

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