Noah Scott asked:
The Chief Executive of DaimlerChrysler Dieter Zetsche is under pressure as it decides on the fate of its money-losing Chrysler Group. But according to some reliable sources the automaker is open to any offer coming from US automakers that are willing to take the rein over Chrysler.
The big question now is which company is interested enough in buying the Chrysler unit. According to a German magazine, DaimlerChrysler is already negotiating with General Motors but for the meanwhile DMX officials would like to keep quiet on the matter. “I cannot and will not go into any further details,” Zetsche said during an interview.
The mention of General Motors as a possible buyer of Chrysler has aroused various reactions. Although it is true that GM is still the world’s largest automaker and producer of the most popular brand of auto parts like GM fenders, but it is also no secret that the numero uno is also facing financial difficulties and purchasing another money-losing brand may not be a good move for the automaker. But then again Chrysler has some very good models and so does GM. For now all we can do is to wait and see for developments.
Aside from the possible sale of Chrysler, DMX has also announced 13,000 job cuts as part of the company’s recovery plan. The said job cut will affect 11,000 DC employees in the US plus 2,000 in Canada. For the US alone 2000 white collar jobs along with 9000 UAW jobs are going to be cut which will result to the closing of an assembly plant in Newark, Del and a part distribution center in Ohio. The Newark plant builds large SUVs for DC. Truck plants in Michigan and Missouri are also going to be affected reducing production capacity to 400,000 units.
Over the weekend the pressure on Zetsche to let go of Chrysler intensifies. According to one DaimlerChrysler shareholder Henry Gebhardt, DWS fund manager in an interview with a German newspaper, “This needs to be an option that must be examined again and again.” He also compared the DaimlerChrysler breakup to BMW’s sale of Rover saying that “It would be irresponsible for Daimler management to exclude this option.” DWS is Germany’s largest fund company and owns less than 1% of shares on DaimlerChrysler.
In fairness to Zetsche he is doing all he can to save Chrysler and recently he held meetings with the United Auto Workers Union asking for the same health care concessions that the union gave General Motors and Ford Motors. Unfortunately the union refused Chrysler saying that the German Company has deep pockets to pay for workers’ health care. Zetsche will still try to work it out with UAW but he also made it clear that if the UAW will refused to accept the new terms that will be set by DaimlerChrysler then he is left with no other option but to let go of Chrysler.
According to some sources the problem with Chrysler Group began nine years ago after the merging of Daimler-Benz and Chrysler. Mid-level managers at Mercedes have resisted any collaboration that could tarnish the luxury brand’s image which is not entirely a bad thing if it has not hinder the Chrysler Group from achieving the level of synergies that it has promised in 1998.
Thomas LaSorda said that the recovery plan that was outlined by DaimlerChrysler can strengthen Chrysler’s position in the North American market and at the same time create the underpinning for a new business model that is geared to a possible global growth and a shift to more fuel-efficient models. The plan if put into action would help DC a regain profitability by 2008 and an approximately 2.5% sales retune by 2009. In the year 2006 Chrysler lost $1.5 billion while DaimlerChrysler overall earnings reached $7.3 billion for that same year.
FUERSTENBERG
