Will DCX dump Chrysler?
The Detroit News has learned that the plan, to be unveiled on Feb. 14, calls for unprecedented sharing of vehicle architectures and parts between Chrysler and Mercedes, including developing small cars and SUVs together.
The plan also outlines deep cost cuts similar to those at General Motors Corp. and Ford Motor Co.: plant closings, a reduction of factory shifts and employee buyouts aimed at slashing more than 10,000 blue-collar jobs. Sources said the likely closures will include an assembly plant in Newark, Del., and an engine plant in Detroit.
Overall, the success of Project X is critical to the future of Chrysler, which lost a projected $1.2 billion in 2006 and saw its U.S. market share slide to 13 percent at year's end. In Germany, anxious investors are putting pressure on DaimlerChrysler Chairman Dieter Zetsche to sell all or part of Chrysler. More at Detroit News
11/29/06 Pressure is mounting for DaimlerChrysler AG to offload the Chrysler Group.
Chrysler lost $1.5 billion between July 1 and Sept. 30, dragging down DaimlerChrysler's earnings to $1.13 billion.
DaimlerChrysler maintains that Chrysler is not for sale. But several investors, including SEB Asset Management, JPMorgan and Union Investment, reportedly contend that DaimlerChrysler should consider divesting itself of Chrysler to maintain its value.
"We remain convinced that management patience towards under-performing assets like Chrysler has worn thin and increases the likelihood that DCX will reduce exposure to Chrysler," JPMorgan said in a note.
"German management has certainly considered it," said George Magliano, director of automotive research at Global Insight. "But I don't think it could occur."