Dieter Zetsche

Don

't be fooled by that folksy walrus mustache, the colloquial English or the laid-back style: Germany's Dieter Zetsche has earned a reputation as the auto industry's top mechanic. He has already done one star turn, restoring Chrysler to profitability after years of losses. Now he has taken his toolbox to Chrysler's $180 billion parent company, DaimlerChrysler—and, in overhauling a giant auto firm, is setting a standard that Detroit may find instructive.

Zetsche, 53, became chairman of Germany's most famous company in January. Within less than a month, he announced a major corporate streamlining and, to send a message that the comfy days are over, moved himself and other execs out of the firm's gleaming headquarters in Stuttgart and into a gritty factory on the other side of town.

His next big task is to rehab the firm's critical Mercedes brand, whose star has dimmed as rivals from BMW to Lexus have exploited uncharacteristic quality problems. Zetsche also inherited other challenges, including a tiny, fuel-efficient car called Smart that has huge potential but so far is notable only for its outsize losses. "Our mission is to put DaimlerChrysler back on top," Zetsche told shareholders last month, shortly after announcing fresh cutbacks at Smart, including the discontinuation of one of its two remaining models.

Zetsche is the most prominent of a new generation of hands-on German managers who are far less sentimental about business than were their elders. So far, he's winning plaudits—DaimlerChrysler's stock price is up more than 30% since he was named chairman. "It's clear he's absolutely determined to sort things out," says Peter Schmidt, a British-based auto-industry consultant, "but it will take time. Especially at Mercedes, the problems behind the brand cannot be fixed in 12 months." At Chrysler, it took two years for Zetsche's turnaround strategy to work. It became known as "disciplined pizazz"—a combination of smart marketing and tough financial management. Watch for a lot more of it in the year to come.

Next: J.J. Abrams, Artist & Entertainer >>