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* CEO Zetsche's prospects to stay rise with performance
* Andreas Renschler resigned, citing personal reasons
* Renschler: prospect of Zetsche staying a factor - WSJ
* Daimler succession issue not yet decided (Recasts throughout, adds sources, detail, background)
FRANKFURT, Jan 29 (Reuters) - Daimler's chief executive may have his contract extended beyond 2016 on the back of last year's recovery, analysts and executives said on Wednesday after the surprise departure of a Mercedes executive who was tipped for the top.
Succession has been a divisive issue at Daimler, and last year the supervisory board extended 60-year-old Chief Executive Dieter Zetsche's contract by three years, instead of an expected five, as well as reshuffling senior managers to gauge the potential of other leadership candidates.
Since then, Daimler has narrowed the sales gap with its premium-car rivals BMW and Audi, and Mercedes-Benz has launched well-received new products.
Zetsche remains head of Mercedes-Benz Cars, where Andreas Renschler was head of manufacturing. He will leave the company with immediate effect, Daimler said late on Tuesday, citing "personal reasons".
His going, Daimler's recovery, and Zetsche's recent charm offensive toward labour unions, may bolster his prospects of another contract extension.
"The latest move means Zetsche's position is uncontested," one Daimler employee, who declined to be named, said.
No successor has been chosen and Zetsche's contract terms are unaltered, a spokeswoman for the company said on Wednesday.
Renschler, 55, took on his new job at Mercedes in April as part of the executive reshuffle, which made him feel he had become a pawn in a power struggle between the supervisory board and Zetsche, a person familiar with his thinking said.
Renschler's contract was due to expire in 2018.
"In our view his move from head of Daimler trucks to running Mercedes production was a step backwards," analysts at ISI said.
In April, Daimler's chairman said that Renschler's move from Trucks, in favour of 53-year-old Wolfgang Bernhard, would allow both men to showcase their leadership potential.
The Wall Street Journal said that one reason for Renschler's resignation might be that he was having to wait too long to take the top job.
"If Dieter wants to work for six years, I would not be happy to do my job," Renschler was quoted as saying by the paper. Daimler said the comments had been misunderstood.
"Renschler's comments have been taken out of context. He merely wanted to point out that he is not an obvious succession candidate because he is of a similar age as Dieter Zetsche, and would therefore not be a candidate to lead Daimler when Zetsche retires, whenever this may happen," a spokesman said.
Analysts cite three Daimler executives who are seen as contenders if Zetsche's contract is not extended.
Among them is Daimler's 54-year-old Chief Financial Officer Bodo Uebber, Bernhard, and Hubertus Troska a 53-year-old head of its China operations, Berstein Research analysts said in a note.
Analysts say Renschler may take a job at Volkswagen to could take a job at Volkswagen to help integrate its trucks businesses: MAN, Scania and Volkswagen Commercial Vehicles.
Combined, VW's truck, buses and van units have 35 billion euros ($48 billion) of commercial vehicles sales, similar to Daimler, the world's No. 1 truck maker, whose commercial vehicles sales are about 44 billion, ISI Global analysts said.
Two sources at Volkswagen said they had no knowledge of a job offered by VW to Renschler. Volkswagen declined to comment.
Volkswagen's management in Wolfsburg is growing frustrated with a lack of progress forging a truck alliance designed to reap cost savings and take on Daimler, two sources at VW group familiar with the matter told Reuters.
But a clause in Renschler's contract prevented an immediate such switch to a competitor, a Daimler spokeswoman said. (Reporting by Edward Taylor, Ilona Wissenbach, Andreas Cremer and Jan Schwartz; Editing by Louise Ireland)