Daimler says Brexit would be economically damaging for Europe

Leaving the free trade body would cause a "significant economic downturn for all parties involved, mostly for Great Britain, but very much for the rest of Europe as well," Zetsche said at a Mercedes-Benz event in Portugal on Friday.

The European Union is worth preserving, even though political developments in recent years have not all been favorable, Zetsche said. Turning back the clock on all the progress that Europe has made since World War Two would amount to a "historic failure", Zetsche said.

British Prime Minister David Cameron has called an in-out referendum on the country's EU membership on June 23. Opinion polls suggest the result could be very close.

(Reporting by Ilona Wissenbach in Portugal, writing by Edward Taylor; Editing by Susan Fenton)