OCTOBER 15, 2004
Mercedes and McLaren
It is a fortnight since Eckhard Cordes took over from Jurgen Hubbert as the head of the Mercedes-Benz Car Group, the luxury car division of the DaimlerChrysler empire. The Stuttgart company has not been doing well his year because of increased competition and exchange rate problems and Cordes is now looking at how the company moves forward.
Cordes says that he will start making changes in January, with the Detroit Motor Show ear-marked as the venue for the first signs of change. Until then he is looking at the company in great detail. However his past record at the company's truck division may give some hints as to his likely course of action. After he took over the commercial vehicles division in 2000 he drove down costs, brought in wage cuts and closed plants and concentrated on improving quality and the products available. Now the truck division is booming. Hubbert has already put in place plans for new models and has done a deal with the unions to cut labour costs.
The value of Mercedes-Benz's Formula 1 programme is not disputed but how the relationship works with McLaren remains a point of interest in F1 circles. However, the idea that Mercedes-Benz will simply buy out Ron Dennis and replace him with someone new is one that will no doubt raise a wry smile from Dennis himself. Through his deal with longtime partner Mansour Ojjeh Dennis and his family still control 60% of the team, which means that Mercedes-Benz does not have control, even if there is always the threat of withdrawal to focus the mind of the two partners. That is unlikely to happen due to the close links with Mercedes-Benz and the long-term plans for the two companies. Thus if Mercedes-Benz wants to own McLaren it will have to buy out Dennis and Ojjeh. And Dennis is not likely to sell unless he is left in management control of the team he has built up in the course of the last 25 years. Discussions about such a deal have been going on for some months but under Hubbert no deal was agreed. It will be interesting to see if thing are different with Cordes.
Thus rumours of deals involving the removal of Dennis and Norbert Haug can be discounted for a while. Haug may be in the firing line but Cordes will probably be smart enough to know that if there is to be change ahead, it is best to do it all at the same time. The name of Gerhard Berger has been mentioned for some months but the former head of BMW Motorsport is in no rush to make any decisions.
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