A Sale is Not Chrysler’s Only Option

March 6, 2007

While DaimlerChrysler is determined to “explore all of our options,” CEO Dieter Zetsche seemed to be stressing that there is no firm commitment to sell its troubled U.S. arm, the Chrysler Group, during an interview at the Geneva Motor Show.


“I’m absolutely confident Chrysler will become profitable on (the) plan” its chief executive, Tom LaSorda, outlined last month, stressed Zetsche. There are a number of reasons to believe the plan is well-grounded, the German executive asserted. For one thing, about 80 percent of the $4 billon program will be achieved by planned cuts, with only 20 percent required to come from improved revenues.


Zetsche declined to go into specific details of the bidding war reportedly now underway. A variety of suitors have been linked to Chrysler, including General Motors and several large Wall Street investment groups. Zetsche did tell TheCarConnection.com that the process, “is going the way I expected it would.”


There have been numerous questions raised about the process – and DaimlerChrysler’s precise intentions. Indeed, a few observers have begun to wonder whether DC is really all that serious about a sale. It is very possible, said one long-time industry watcher, asking not to be named, that the company may be using the news to put pressure on its American workers in a bid for big concessions. There’s no question that Zetsche and his team were sorely frustrated when, last year, the United Auto Workers refused to approve for Chrysler healthcare givebacks that had been granted General Motors and Ford.


Indeed, in one interview, Zetsche outlined two key reasons for looking at Chrysler’s future. One was the U.S. maker’s worsening sales situation. But the other was “the stance the union took, saying that ‘What we grant GM and Ford, we will not grant Chrysler.’”


While most of the media’s attention has been focused on Chrysler in recent months, Zetsche reminded reporters that there’s some good news out of DC these days, notably the sharp improvement in the financial health of the flagship Mercedes-Benz division. “We feel we have built significant momentum within the last year,” said the CEO. Zetsche emphasized he is “absolutely confident” Mercedes will hit its target of a 7-percent return on sales in 2007. He said he’s also confident that the long-awaited profitability of DaimlerChrysler’s smart division will finally appear, declaring that “Smart will be profitable, starting this year.”


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