DaimlerChrysler's performance has led to criticism of Mr Schrempp

The German-American car firm, currently battling to attract customers and boost sales, announced that Mr Schrempp would leave at the end of 2005.

Investors had questioned his plan to expand globally at a time of fierce competition and waning consumer demand.

The group's shares leapt almost 9% by the close of trading in Frankfurt.

Mr Schrempp has been under pressure as earnings have suffered and the prestige of the Mercedes brand was tarnished by build and reliability problems.

He will be replaced by Dieter Zetsche, head of the firm's Chrysler division.

Brighter days?

Mr Schrempp was seen as the architect of DaimlerChrysler's global ambitions.

See DaimlerChrysler shares

As a result, he came under fire when Daimler's merger with US firm Chrysler was not an immediate success and when the carmaker had to pull out of an expensive partnership with unprofitable Japanese rival Mitsubishi Motors.

His replacement Mr Zetsche is credited with turning around the struggling Chrysler business in the US. Mr Zetsche will be replaced at Chrysler by Thomas LaSorda.

Balance sheet

The personnel changes overshadowed DaimlerChrysler's earnings report on Thursday, which bettered analysts' forecasts.

Operating profit in the second quarter fell a less-than-expected 20% to 1.67bn euros (�1.18bn; $2.05bn).

Net profit jumped by 28% to 737m euros, and sales rose a touch to 38.4bn.

Helping to lift earnings was a surprise 12m euro operating profit at flagship brand Mercedes and a 4% increase in operating profit at Chrysler.

Growth was also boosted by the company's truck and van business, which had another strong quarter thanks in part to North American demand.