Just when DaimlerChrysler must have thought its problems with Mercedes could not get any worse, along comes a colourful scandal that has decapitated its German sales organisation.
The German-US carmaker has fired two of its most senior Mercedes sales staff - the head for Germany and the manager of its Hamburg office - and accepted the unexpected retirement of the head of German sales for Daimler. The prosecutors' office in Stuttgart has confirmed it is investigating at least three, but fewer than 10 individuals from Daimler, all accused of breach of fiduciary duty.
Daimler said the two employees were dismissed after anonymous tips to its audit department. Company insiders said there were grounds to suspect that Eckhard Panka, former head of German sales for Daimler, sent Mercedes workers on expenses to help his girlfriend build a holiday home. Panka retired in December and, according to officials and reports, has agreed to repay the cost of flights, worth about €20,000.
His girlfriend is the former wife of Jürgen Fahr, head of German sales for Mercedes, who was fired this month along with Walter Missing, head of the Hamburg sales office, according to insiders.
It's further alleged that there are grounds to suspect all three of being involved in building work in Majorca as well as a separate incident of exporting cars through the grey market into countries thought to be in eastern Europe and the Middle East.
One senior Daimler executive said: "The players may be the same, but there are two problem areas here."
All this comes amid a sharp fall in sales of Mercedes and Smart cars in Germany in the past two months and serious quality problems at Daimler's traditional cash cow, causing Mercedes profit to fall 97 per cent in the fourth quarter to €20 million.
In December, Daimler brought in a new head of German sales, Christoph Köpke, from South Africa rather than promoting internally, to ensure the scandals stopped. The company says the management upheaval has not played a role in Mercedes' recent sales slump as the executives who left were involved in strategy and advertising rather than day-to-day selling.
Instead it has pinned the blame on component supplier Bosch for providing a faulty diesel fuel injection pump, which forced it to halt production at its main site for two days. Bosch officials have reacted privately with anger to the claims, noting that sales also fell in the US, where virtually no diesel cars are sold.
Panka and Missing and the prosecutors' office could not be reached for comment on Sunday while there was no response at Fahr's home.