Zetsche eyes 2007 gains at Mercedes, Chrysler

DETROIT, Jan 8 (Reuters) DaimlerChrysler expects to build on sales success at its premium Mercedes Car Group division in 2007 and also sees higher sales at U.S. arm Chrysler, Chief Executive Dieter Zetsche said.

''As far as the brands are concerned, for Mercedes we intend to continue at the record levels we have set in 2006 in 2007,'' Zetsche told reporters at the North American International Auto Show.

''And with Chrysler...(division head) Tom (LaSorda) is saying he intends to sell more in 2007 than in 2006. International markets are playing a major role in this regard,'' he said, noting Chrysler had a good 2006 outside the tough U.S. market.

Zetsche said LaSorda continued to enjoy the group's backing despite a loss in 2006.

''Tom clearly has the support of the supervisory board and my support. He is doing a good job in a difficult environment,'' he said.

In general, the world's fifth-biggest carmaker thinks the U.S.

automotive market will slip this year and global markets will decelerate, Zetsche said.

''As far as the (U.S.) market is concerned, we do expect a slight decline from 2006 levels, not a dramatic one,'' he said.

''As far as the world car market is concerned, we see growth, if less pronounced than 2006 and mainly driven by emerging markets.'' Archrival BMW maintained its thin lead over Mercedes Car Group to remain the world's biggest premium carmaker in 2006, but Zetsche said he was ''certainly not'' bothered by this and would focus on profitable growth.

He reiterated that Mercedes Car Group would hit its target of generating a 7 percent operating margin in 2007 and would be able to improve on this in years ahead.

He said the group would consider bringing a small Mercedes-Benz car to the U.S. market if it thought it could make it a success, but would not do so if if ran the risk of diluting the brand's premium image, which he called the top priority.

He also played down the risk that the weak dollar posed for 2007 earnings, saying the group's currency exposure was around 70 percent hedged.

Zetsche said it was too soon to say whether U.S. car buying habits had changed given high fuel prices. But he added there could be some recovery in light truck sales if gas prices stay where they are, something he called ''a very big if''.

REUTERS DKS PM0443