FRANKFURT, Germany (AP) — DaimlerChrysler (DCX) said Wednesday it is reviewing all aspects of its U.S.-based operations, including management and strategy, after a $1.5 billion operating loss at the Chrysler division dragged down the automaker's third-quarter profit 37%.
DaimlerChrysler's overall profit beat analysts' estimates, but the tough talk about examining the Chrysler Group led analysts to question whether the division could even be sold off.

Chrysler executives said they are "in no way satisfied" with the third-quarter results but said it is far too early to draw any conclusions.

DaimlerChrysler earned 541 million euros ($686 million) in the July-September period, down from a profit of 855 million euros a year earlier. Analysts polled by Dow Jones Newswires had expected a loss of 47 million euros ($58.9 million).

Overall, DaimlerChrysler's operating profit fell 51% to 892 million euros ($1.13 billion), but beat analysts' forecast of 549 million euros ($688.5 million).

While results lagged at Chrysler — hampered, like its U.S. rivals, by difficult market conditions — the German-American automaker saw strength in its Mercedes Car Group, where operating profit more than doubled to 991 million euros ($1.3 billion).

Overall sales fell 8% to 35.2 billion euros ($44.6 billion), hurt by a 26% decline at Chrysler to 9.5 billion euros ($12 billion).

The 1.16 billion euro operating loss at Chrysler compared with an operating profit of 310 million euros the year before and "was primarily the result of a decrease in worldwide factory unit sales, an unfavorable shift in product and market mix, and negative net pricing," DaimlerChrysler said in a statement.

Chrysler CEO Tom LaSorda said the company is "in no way satisfied" with the third-quarter results.

"We have taken dramatic steps to reduce production and shipments to address the inventory situation in the U.S. and we continue to work to find new ways to eliminate waste, lower our costs and improve quality," he said in a statement.

Chief Financial Officer Bodo Uebber said seven teams comprised of executives from Chrysler and other parts of DaimlerChrysler would analyze and examine the division's business practices and review "all aspects of the value chain."

The teams will review Chrysler Group's product strategy, portfolio management, capital management, fixed cost management, structural changes, manufacturing, material costs, revenue management and quality. No timetable was released.

"Our aim must be to improve the earnings situation at the Chrysler Group as quickly, as comprehensively and sustainably as possible," Uebber said.

He offered no direct reply when asked during a conference call if the company is considering selling Chrysler or bringing in a partner.

"We have announced a thorough optimization program. We're looking at all details of the value chain, we're looking at structural changes," he said. "What we need to safeguard is the sustainable profitability of the Chrysler Group and DaimlerChrysler."

Asked if he could say that a sale of Chrysler had been ruled out, Uebber said he could not provide any more information.

"First we do our analysis, then we talk about measures, then we draw conclusions," he said.

The company warned last month of a large loss at Chrysler, but said it would return to profit in the fourth quarter.

"Though a number of new models — the Wrangler, Compass, Aspen, Nitro — are scheduled for imminent launch, Chrysler faces an uphill turnaround task," said Stephen Cheetham, a European auto analyst at Sanford C. Bernstein in London.

Chrysler, like its American rivals, has suffered as high oil prices lead buyers to shift toward smaller cars, away from sport-utility vehicles and other models that use more fuel.

Last month, DaimlerChrysler lowered its 2006 operating profit forecast to around 5 billion euros ($6.3 billion) from its previous forecast of 6 billion euros ($7.5 billion), citing problems at Chrysler.

Looking ahead, the company said it expected a slight decrease in global demand for automobiles in the fourth quarter, but said its overall sales growth for the year should be around 3%, down from the 4% it saw last year.

Because of lighter demand in Japan and the U.S., DaimlerChrysler said it expected its total vehicle sales for 2006 to be less than the 4.8 million it sold in 2005.

 

If they stop making our great vehicles ugly... Make economic engines and build what consumers want, they wouldnt have a problem...

 

DOWN WITH CHRYSLER EXECUTIVES! [>:]


And in with the new one's, Chase and Matt

 

That actually wouldnt be a bad team! We seem to have many favorites in common and agreements on what should be done, but a lot of disagreements about some vehicles... We could counter each other's thoughts!

 

I do not think that is the issue. I think many of the DC cars look good. Their appeal is the bigger more powerful engines. Even the automakers with small engines that are fuel efficient are not turning profits, so why would DC be able to? Answer, they couldn't. The issue is two fold.

1. Americans will not buy a car right now due to other expenses being to high and if they do buy they only want them if they can get them at a Ultra low price, hence no profit on the unit. We are willing to wait until year end and pick off what is left on the lot at a loss to DC.
2. The market is flooded.

My opinions...

1. Car makers in the US will continue to loose money until they refuse to give out incentives that let the cars go at or near cost. Obviously the automakers would have to be in collusion on this otherwise if we can buy a Chevy at 12K off sticker while Ford and DC are just 2K, guess what most will buy..... Trust me there is not enough loyalist out there, it is all about the dollar!
2. Or, they could all continue to loose money and hope for a big change in the economy that results in less cost to the consumer across all levels (not going to happen).
3. Then you have the last thought of the automakers.... waiting for automakers to close shop, resulting in less competition, which is the survival of the fittest theroy, or in this case survival of the best of the worst.

Consider this.... 30 years ago you did not have Saturn, Kia, Scion, Hummer, a Jeep line with to many models around. You did not have very many cars like Honda, Toyota, BMW, Mercedes, Isuzu, ect, they had yet to really push and enter the US market. The market is flooded! The only way to fix it is opinion #3, yes it is a opinion. But mark my words, someone will fold, or be bought out then rubbed out of existance within 5-7 years. And I am not talking about a small part of bigger automakers, I am talking the whole automaker line. Will it be a sad day and almost unbelievable that something like a GM, DC or Ford line will cease to be, yes. But that is where we are headed. Unless you can come up with another 30-50 million drivers or so with $$ to buy a NEW car.

Incidently the airline industry has the same dillema.

Someone recently asked me if Ford (F) was a good buy, they saw it under $10 per share. I just laughed.

 

Oh, one more food for thought, when a automaker is loosing money, then getting pressured by the other owners, like C is getting pressure, the fun stuff disappears. This could result in less SRT models and certainly few to no new ones. Everyone that keeps talking about a SRT8 truck, or a SRT8 Challenger..... It may not come, at least for a while. This sort of supports MIdnights theory of more fuel effiecnt cars, but this is a result of business. Cutting back the thrills, getting to basics and cutting overhead in the process. Other than the new GT500 Mustang have your seen new things coming from SVT lately? This is why.

 

Last I heard Ford dropped SVT altogether.

If Chrysler is to survive, IMO, they need to drop the dead weight, Daimler. Mercedes quality has been so sub par since the early 90's its rediculous. They are great for the first 2-3 yrs, but fall apart damn near as fast as a Yugo afterwards. People that buy them can afford to replace them every year or two.

Then they need to drop some models altogether. We dont need 5 versions of a Wrangler (or any other car for that matter). Stick the the short 2dr wrangler with just 2 levels (base and whatever you wanna call upscale). Drop the pacifica altogether (now that they put the Aspen in chrysler). Sad to say as this will offend SOMEONE here, drop the Nitro, Jeep Compass, Patriot and/or Liberty.

Lineups should be..
Jeep - Wrangler (base, mid), Commander (base, mid, upper), Grand Cherokee (mid, upper)
Chrysler - Crossfire (coupe/conv), PT, Sebring conv, 300, Town and country mini (mid, upper), Aspen
Dodge- Caliber (base, mid), Vipers, Charger, Magnum, Caravan (base, mid), Dakota, durango, ram.

SRT limited to Viper, Crossfire and charger.

Fix it now before they end up doing like GM is gonna do over the next 5-10 yrs (dealers WONT like it either). 2 lines. Chevy/Cadillac/Saturn, Buick/Pontiac/GMC

 

SVT does exist, but as I said, due to big losses they need to cut overhead, so the thrills are the things that go first.

http://www.svt.ford.com/

 

ford has trimmed down the SVT group, because they really havent done much since 2003 when they released the terminators...the lightning concept never came to be...

 

Everything is getting blocky, with big ridiculous bumpers...

We simply need more fuel efficient engines... Not everyone wants a HO V6 or HEMI...

Need more sporty coupes...

These arent the only problems of course, but they are part of it...