Renault, Chinese Interested in Snapping up Chrysler When Daimler Unloads It

By MICHELINE MAYNARD

DETROIT, Oct. 25 - DaimlerChrysler without Chrysler might not be that
farfetched an idea.

Executives at Chrysler's German parent on Wednesday refused to rule
out the possibility that the Chrysler Group could be spun off or sold,
after Chrysler announced that it lost $1.5 billion in the last three
months.

Though there are no indications that such a spinoff is imminent, the
possibility of such a sale is the latest sign of upheaval in the
American auto industry, as the three Detroit companies struggle to
return to profitability.

Such a move would potentially end the eight-year merger that shook the
automobile industry when it was announced in 1998. That merger
triggered other transnational arrangements, like the alliance between
Renault and Nissan, and the now-defunct deal between General Motors and
Fiat.

But DaimlerChrysler, meant to be a merger of equals between Germany's
Daimler-Benz and Chrysler of the United States, has instead proved to
be an automotive seesaw.

Rarely in the last eight years have both Chrysler and Mercedes,
Daimler's German luxury brand, been on the upswing at the same time.

"The goal is to create a strategy that assures the sustained
profitability at Chrysler and DaimlerChrysler," Bodo Übber,
DaimlerChrysler's chief financial officer, said during a conference
call with industry analysts and journalists. He added: "We don't
exclude anything here."

Mr. Übber continued, "We at first are doing the analysis, then we
are talking about it, and we draw our conclusions."

His careful language prompted immediate questions about whether
Chrysler was up for sale. To one, Mr. Übber replied, "I can only
repeat myself - first analysis, second measures, third is conclusion.
That is what my statement is."

He added: "Any speculation is what you are doing. I don't do any
speculation."

Officials at Chrysler maintained later Wednesday that the company was
not in danger of being abandoned by the German parent that had wooed it
so forcefully almost a decade ago. Indeed, DaimlerChrysler's chief
executive, Dieter Zetsche, who ran Chrysler until a year ago, has
emphasized his intent to fix Chrysler, not dump it.

But a potential suitor exists: Carlos Ghosn, the chief executive of
Renault and Nissan who tried unsuccessfully this summer to explore a
possible alliance with G.M., has made no secret of his desire to add a
North American partner to his union.

Beyond Mr. Ghosn, the most likely candidate might be a company from
China, whose automakers are eager to expand into North America, said
Ron Pinelli, an industry analyst with Autodata of Woodcliff Lake, N.J.

But "all the Chinese would want would be the dealers and the brand
names - they don't want the factories or the employees," he said.

Chrysler's situation now is in sharp contrast to 1998, when it was an
auto industry darling, known for taking risks with styling and earning
some of the biggest profits in the industry on vehicles like the Jeep
Grand Cherokee and the Dodge Ram pickup.

The merger was the brainchild of a former Daimler-Benz chief executive,
Jürgen Schrempp, who envisioned a global company that could share
purchasing, manufacturing and development while keeping separate
identities for both Chrysler and Mercedes.

The deal, however, has never paid off on the scale that Mr. Zetsche
imagined, and indeed, Chrysler has bounced back and forth between its
traditional identity as the third-biggest American player and its goal
of joining Mercedes among a small group of foreign brands with clear
identities and buyer loyalty.

The company, which had insisted its fortunes would improve during the
second half of the year, instead surprised analysts a few weeks ago by
disclosing it expected to lose $1.5 billion.

Earlier this week, Chrysler acknowledged that it has kept as many as
100,000 vehicles in its order bank, a separate supply of cars that have
not been assigned to dealers and are not included in its inventory
figures, which are already high by industry standards.

The company's problems led it to create what it is calling "Project
Refocus," an effort to re-examine every aspect of the way Chrysler
does business, from manufacturing to purchasing and its overhead costs.


The company is striving to cut the equivalent of $1,000 out of the cost
of every vehicle, a difficult task given that Chrysler is introducing
eight models this fall. It is much easier for companies to cut costs
before new models are introduced.

Another difficult task would be setting a value on Chrysler as a
separate company, as well as determining the mechanics of a possible
breakup.

 

By MICHELINE MAYNARD

DETROIT, Oct. 25 - DaimlerChrysler without Chrysler might not be that
farfetched an idea.

blah blah blah.

-->Rarely in the last eight years have both Chrysler and Mercedes,
-->Daimler's German luxury brand, been on the upswing at the same time.

That's the first thing in a long time in the auto industry that looks like a
strategy. That's the perfect reason for staying together. I did not know
it was working out so well for them.

 

One's been supporting the other for awhile now, and the roles
reverse...why dump the Chrysler operation?

It's funny to see people exhibiting such angst about the Daimler
takeover of Chrysler. When Iacocca was running things, he dreamt of
forming a "Global Motors" model, where he'd have a troika with one
strong Euro builder and one emerging Japanese builder. He got close,
getting into merger talks with VW in the early '80s, but screwed up by
picking Mitsubishi as the Japanese component. After VW saw the
books, they ran like hell, probably at the behest of the German
bankers. Remember, even this late, the US bankers were still trying
to force Chrysler Corporation to go into bankruptcy, and Iacocca told
them where to stick it. Reason: while everyone else would get
screwed...customers, workers, suppliers, taxpayers...the banks
would've made out like bandits...which they are, anyway.