Chrysler Exec's Change of Tune Rattles Nerves

Anthony Fontanelle
February 16, 2007

Wednesday was not just a bad day. In fact, awful is an understatement. It is especially true to workers who have endured the greatest blow of Chrysler’s verdict on Wednesday. The announcement sounds like the slashing of 13,000 jobs was not enough that it scared the 69,456 remaining Chrysler Group workers.

The anxious workers were rattled by what DaimlerChrysler CEO Dieter Zetsche said. "In order to optimize and accelerate the presented plan we are looking into further strategic options with partners beyond the business cooperation partners mentioned," Zetsche said. "In this regard, we do not exclude any option. ..."

Analysts have interpreted the statement to mean: Make us an offer. Everything and anything could be for sale, including the entire Chrysler Group, which lost $1.47 billion last year. Something could be wrong. It means the change of tune from its previous statement to hold on and improve for the better. Obviously, the tune has changed to rattle more nerves.

Zetsche and others at DaimlerChrysler had time and time again declined to comment on Project X and rebuff suggestions in previous months about the selling of Chrysler or the ouster of its President Tom LaSorda. However, Zetsche’s statement obviously made a U-Turn.

The information that Zetsche would openly state that all options are now on the table regarding Chrysler's future, spread like wildfire at Chrysler's Auburn Hills headquarters. While the options are contemplated, Chrysler will cut 11,000 hourly jobs and 2,000 salaried positions. One worker commented, "It was like putting a 'For Sale' sign in front of the building."

Last year’s deleterious blow has affected the entire state of Michigan. Global economy is unforgiving to the underperforming companies like Pfizer. The latter has announced its plan to close its Ann Arbor research complex. The auto industry is not an exception. Ford Motor Co., General Motors and DaimlerChrysler AG have suffered debilitating pain as well.

After the gasoline prices soared, large fuel hogs like Dodge Durango became slow-sellers. The shift was so swift that the most efficient EBC brake rotors couldn’t stop its damaging acceleration. The market has shift to small and fuel-efficient cars; this fact weaved Chrysler’s problems.

When Zetsche was still running Chrysler Group in 2002, he set a bold target of bolstering its vehicle sales by one million units or 37 percent a year to over 3.7 million by 2010. The irony is that the company has sold only 2,698,429 units worldwide. The figure is 1.7 fewer than 2002 sales. Hence, instead of moving forward, Chrysler is actually farther than its set target.

In addition, the overall brand image of Chrysler is stuck at stuck at poor-to-mediocre. According to Automotive Lease Guide of Santa Barbara, Calif., the residual values of Chrysler's cars and trucks, or their estimated value after 36 months of driving, averaged 41.1 percent in 2006. It is far below the industry’s average 44.6 percent. What's worse, the company’s residuals showed less improvement compared to both Ford and GM or the industry average from 2002 to 2006.

So many questions are thrown yet; most returned unanswered. How long will he stand by LaSorda and the new Chrysler turnaround plan? Will Zetsche push for more integration of Chrysler and Mercedes product development efforts? Would he really sell or dismantle Chrysler? Questions keep pouring in… And they make more nerves rattle…especially in Auburn Hills.

Source: Amazines.com