Zetsche: It’s DaimlerChrysler For Good

The DaimlerChrysler high command has no intention of dumping the Chrysler Group, which has become an integral part of the company's overall operations.

Dieter Zetsche, the Chrysler Group chief executive, noted during an interview during the North American International Auto Show the two companies now depend on each other for help in technology, purchasing and other areas. In addition, Chrysler is preparing to embark on a project to build pickup trucks for Mitsubishi. Meanwhile, Chrysler and Mitsubishi are working on joint development of a new architecture that will be used for small and mid-size cars, Zetsche said.

“This question has never been considered by the Board of Management or Supervisory Board,” Zetsche said. “The best way to kill that speculation is to strive for a better Chrysler and that's what we’re doing,” added Zetsche, who also emphasized that the executives closest to DaimlerChrysler’s car and truck enjoy a close working relationship. The close working relationship, among the top executives such as Juergen Hubbert and Eckard Cordes, also makes it relatively easy for plot automotive strategy for the entire company, Zetsche said.

Results still pending

While the 1998 Daimler-Benz and Chrysler Corp. merger has never yielded the financial results touted by the prime movers of the deal, Juergen Schrempp and then-Chrysler chairman Robert Eaton, DaimlerChrysler executives continue to insist the underlying strategy is sound.

In fact, Manfred Gentz, DaimlerChrysler’s chief financial officer, said last week the automaker is even thinking of investing more money in Mitsubishi, which has become integral to the company’s long-range plans. “There is discussion of a capital increase which may make sense but there is no decision yet,” Gentz told an analysts’ meeting.

Nevertheless, speculation intensified last month that DaimlerChrysler might be thinking of giving up on the merger under the pressure of a multi-billion-dollar lawsuit by Las Vegas Kirk Kerkorian, Chrysler’s largest private investor prior to the merger.

Kerkorian maintains the 1998 “merger of equals” that created DaimlerChrysler was an elaborate fraud that leaves him now entitled to compensation. The trial helped solidify Business Week magazine’s decision to name Schrempp as its Worst Executive of The Year.

DaimlerChrysler's efforts to revive its American subsidiary also suffered a significant setback during 2003 as the Chrysler Group failed to meet the objectives of a turnaround plan set out in 2001. Sales dropped by more than three percent, and analysts expect Chrysler to post a $360 million loss for the entire year.

Zetsche admitted during the interview the turnaround plan had stalled during 2003 and the company is expecting is only a modest financial improvement in 2004. “Where we failed was on the revenue side, while we overachieved on the cost side,” Zetsche said. “The latter reflects our overall transformation towards becoming a world-class competitor in all the disciplines. In this transformation, we are on track or ahead and we are very satisfied.”

Zetsche, however, said new products will boost Chrysler Group’s sales in 2004. “We are looking for volume increases and market share increases for us in 2004,” Zetsche said. In addition, international sales of Chrysler, Dodge, and Jeep will increase this year and in the future, helping move the company closer to its longer-term goal of selling one million more vehicles by 2012.

The Chrysler Group announced plans to sell Dodge-brand vehicles overseas and Zetsche emphasized that overseas sales will account for a substantial part of the additional sales over the next decade.

The emphasis on overseas sales underscores the close ties that Chrysler has developed in the past five years with its German partners. Ever since the merger, Chrysler has relied on the Daimler-Benz network to help boost sales in market outside the United States and effort has paid dividends, Zetsche said.

Chrysler also has borrowed technology and expertise from Mercedes-Benz to develop the Crossfire and new rear-wheel-drive cars such as the Dodge Magnum and Chrysler 300.

“These vehicles are the flagship for the Chrysler and Dodge brands,” said Ralph Gilles, the chief designer responsible for the teams that worked on both cars at the Chrysler Group’s design studio in Auburn Hills. “We wanted to make a new statement in the passenger car market,” Gilles told the Auto Week Design Forum.

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