Dr Z and the FT

We read the following in the FT over the weekend, and repeat it here word for word.An interview with Dieter Zetsche focuses on the post Chrysler landscape for Daimler, and there are a couple of interesting observations made about the truck business.Here we go:(FT) What about the truck business?(DZ) Everybody knows that we are very well represented in the key markets. We have made significant progress in Europe and to an almost similar extent in the US as far as our efficiencies are concerned. We are very close to benchmark in Europe with our European business or lets say Mercedes business, which includes our Latin American activities with Mercedes. We are a strong second in North America, so there we have to focus on closing the gap to the first. And last year we have been with a slight profit - slightly better than break-even in Fuso. So this is obviously the maximum focus has to go in order to reduce the dilution in the overall profitability coming from this part of our business. As far as growth is concerned, it seems that in Europe we are not only seeing a good phase of the cycle, but some structural growth of the market because of the expansion of Europe and the work share which creates transportation of goods. We of course want to leverage that structural growth potential -at that time very much limited our capacities as most of our competitors. Asia has significant growth potential. Of course it's not just volume we're struggling for but profitable growth and not in all areas - those volumes associated with very attractive margins. So we have to have the right cost position. And while some people might question the benefits of Fuso to us, this is certainly the only base to explore markets like India, for example, product wise. Not with original Fuso products but with localized products from that venue. And Latin America certainly is another opportunity, certainly not with the same dynamics as Asia or Eastern Europe. And in North America we see continued growth in a cyclical way. Unfortunately being even more volatile based on regulators' decisions. Still overall we continue to see basic growth of demand in this market as well. So overall the markets provide for a lot of opportunity for the truck side and we just have to continue to further increase our efficiency and be successful(FT)Might you not unlock value by splitting the truck and car divisions?(DZ) First different from the past, the truck industry seems to be as profitable as the car industry. So we do not have significant disparity of earnings streams on percentage basis between those two businesses. Secondly, if you think beyond a very short-term perspective, there is no added value to the investor by a split as long as we unlock the potential of our businesses. When we drive our truck and our Mercedes business at benchmark level, you might perhaps fast forward this value potential in our company by just basing on the expectation a short-term gain. But once again, if you trust in the capability of this management, this potential will come at least and we are convinced more than that by us from this business. On that basis, I do not see a benefit for the majority of our shareholders, other than the ones who have a three-month perspective, in splitting the company.(FT) Are you worried that you're vulnerable to outsiders like private equity coming in and thinking they can run the business better than you?(DZ) For sure we feel dramatically less vulnerable than we had been five months ago. At least whoever would try to interfere would have to answer the question why the hell he missed 30 billion and now with much more effort goes for much smaller potential price. There's no certainty in business. It demands from us striving for top performance all the time, which I consider something good, not bad. Therefore I don't feel uncomfortable with our shareholder structure.(Our take) What do we learn from this? Firstly, Private Equity companies are not welcome. Doesn't mean to say that they won't be descending on Stuttgart though - it will be interesting to see how DZ can keep them at bay, not least as a result of the fact that the primary bar to shareholder interest - namely the Chrysler stake - now seems likely to be sold. Secondly, Fuso has not got long to get its sh*t in order. Thirdly, the on-off internal idea about spinning off the truck business now seems to have retreated some way from the front burner.More will no doubt follow