DaimlerChrysler: Last Year's Model?

DaimlerChrysler CEO Dieter Zetsche announced yesterday his plan for restructuring the Chrysler division, once part of the US auto industry's Big 3 (featuring the Model 300 sedan, as recently as two years ago a rousing success story). As reported in the Wall Street Journal, Zetsche was looking at more than job cuts and plant closings:

While implementing the restructuring plan, he and his top aides will look for partnerships to help Chrysler expand into fast-growing international markets, he said, without ruling out a sale.

Possible partners include the auto industry's favorite hookup, Renault, or, everyone else's favorite, a private equity buyer. The key structural issue is, of course, the US unionized auto industry's issues with pensions and health costs for a huge base of retired employees. The business issues are almost too numerous to mention (channel difficulties, inventory forecasting and management, building cars that people want to buy, etc.).

Daimler's seriousness about splitting off or partnering up Chrysler was evidenced in this quote from the Journal article:

Mr. Zetsche ruled out platform-sharing between the mass-market Chrysler unit and Mercedes, which builds luxury vehicles.

A deeper entanglement between Mercedes and Chrysler, which a platform-sharing arrangement would indicate, would make a splitoff or other partnership that much more difficult. So it won't happen.

(Picture: Chrysler 300, via Wikimedia Commons)

strategy, alliances, automobiles, Wall Street Journal