DaimlerChrysler AG to jettison Chrysler

UPDATE Eight years after being taken over by Daimler-Benz, Chrysler remains a company in need of restructuring. So much so, in fact, that executives at the German company are increasingly in favor of unloading the American subsidiary. Dieter Zetsche's stint as an advertising spokesman for Chrysler was a failure. Featured prominently in a Chrysler ad campaign, Zetsche, the CEO of DaimlerChrysler, was trying to convey a message. The ads, which were a blend of humor and irony, were meant to emphasize that Chrysler is not a purely American car company like General Motors or Ford. A Chrysler, according to Zetsche in his role as pitchman for the US automaker, also contains plenty of advanced German engineering, thanks to its relationship with sister company Mercedes Benz. The logic behind the ad campaign was that it would convince customers to pay a little more for a Chrysler instead of switching to a Ford or a GM just because the competition might be offering a few hundred dollars more in rebates.

But instead of selling more cars, Chrysler's sales have in fact gone down since the campaign was launched. The ads featuring Zetsche were discontinued. And at a board meeting last Wednesday, the DaimlerChrysler CEO faced questions over whether he may have failed in his efforts to reorganize Chrysler.

As head of the US subsidiary from 2000 to 2005, Zetsche shut down plants, cut jobs and had his engineers develop new models. He made Chrysler profitable, and his successes were part of the reason he was ultimately promoted to CEO of parent company DaimlerChysler.

But now the US brand has plunged deeply into the red once again, showing a loss of just under €1 billion for the first three quarters of 2006. DaimlerChysler's board of directors was caught completely off guard once again by this development. In a repeat of two previous crises at Chrysler, its German parent has now put together restructuring teams. More at Spiegel.de

10/27/06 DaimlerChrysler AG seemed to send mixed messages Wednesday about the possibility it might jettison its American partner, Chrysler.

"We don't exclude anything here," Chief Financial Officer Bodo Uebber said during a conference call on DaimlerChrysler's third-quarter results, which were marred by a $1.48 billion loss at Chrysler.

Pressed about the possibility of spinning off Chrysler or pairing it with another automaker, Uebber told reporters and analysts that the company was studying the situation and would draw its conclusions afterward.

"We need to safeguard sustainable profitability for the Chrysler Group and for DaimlerChrysler," Uebber said.

But in response to media speculation ignited by Uebber's comments, DaimlerChrysler chief spokesman Hartmut Schick issued a statement late in the day saying "there are no plans to sell Chrysler."

Uebber's comments triggered a rally in DaimlerChrysler shares.

"It's no longer a clear denial" that Chrysler might be dumped, said Juergen Pieper, an auto analyst and co-head of research at Metzler Bank in Frankfurt, Germany. More at Detroit News