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CEO says Daimler won't cut spending on planning and research

Daimler Chief Executive Dieter Zetsche on Saturday said he would not jeopardize the automaker's long-term success by cutting spending on product planning and research and vowed to roll out at least one new hybrid vehicle per year.

"Despite the enormous pressures that our entire industry is under these days, we are facing the year 2009 with measured confidence," Dieter Zetsche was quoted in a copy of a speech to be delivered ahead of the Detroit auto show.

Mr. Zetsche said the auto maker behind the Mercedes brand would roll out at least one new hybrid every year, starting with the 2009 top-of-the-line S400 BlueHybrid executive sedan.

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The Mercedes S400 BlueHybrid, which is scheduled to be available this year, is on track to be the first mainstream hybrid car to use a lithium-ion battery pack.

With a projected 29 miles per gallon, Mercedes is already touting the s400 BlueHybrid as the most fuel-efficient luxury sedan.

"Right now, we consider our ability to innovate a major competitive advantage - especially in difficult times," Mr. Zetsche said.

Lithium-ion battery technology, which has long been used to power consumer electronics, is being adapted to powering a wave of upcoming electric-drive vehicles, including the Chevrolet Volt from General Motors Corp.

Last month, Daimler took a 49-per-cent stake in Evonik's lithium-ion battery unit in order to gain access to the technology that represents the critical component of electric-drive and hybrid vehicles.

"Believe me, we are going to give the term 'E-Class' a whole new meaning," Mr. Zetsche said, referring to the group's popular full-size model that will be relaunched this year and unveiled at the Detroit show.

"I also have a lot of confidence that there will be a bright future for innovative car companies - both here in Detroit and elsewhere - who make the tough decisions and focus on the road ahead. And I most certainly include Daimler among them," he said.

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Daimler, like other auto makers, has been hit by the declining demand in the U.S. market, the single largest car market in the world.

U.S. auto sales dropped by 18 per cent in 2008 and hit their lowest level since 1992 at 13.2 million vehicles, down from 16.2 million a year earlier.

Analysts see further declines in 2009 before the industry starts to recover, with tighter consumer credit and economic recession in the United States hanging over the outlook.

The Detroit auto show starts Sunday.

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