Chrysler to Close US Factories, Slash Jobs, Dump SUVs

15 February 2007

DETROIT: Head bowed in mortification, DaimlerChrysler's US subsidiary Chrysler Group on Wednesday announced plans to cease production of its once top-selling big pickup trucks and SUVs, accompanied by factory closures and the loss of around 13,000 stateside jobs.

The news came as a surprise to industry onlookers, many of whom assumed that the German-owned automaker had transcended the problems that beset the two other members of Detroit's Big Three

Evaporating alongside thirteen thousand American jobs is the credibility of DaimlerChrysler chairman Dr Dieter Zetsche, who until a few months back appeared to walk on water.

Chrysler's return to the black after its profits collapse in 2000 was attributed to the good doctor, whose memorable Victorian physiognomy led to his fronting a Chrysler on-and-off-line ad campaign [WARC News: 17-Aug-06].

According to insiders, the stateside retrenchment could lead to civil war between DC's sibling Chrysler and Mercedes units.

It is believed Zetsche will attempt to cut costs by partial integration of the two brands' production processes - an outcome said to be vehemently opposed by Mercedes executives who worry that the association could impact adversely on the luxury brand's sales.

"There's a lot of fear" inside Mercedes, says a company mole. "They're afraid people will buy a Cherokee and not a Mercedes."

Meantime, a small but growing band of institutional shareholders is demanding that Zetsche hive-off or sell Chrysler. One such dissident is SEB Asset Management fund manager Jürgen Meyer in Frankfurt: "I believe it would be reasonable to break these two companies up if it's possible at a low price," he says.

Data sourced from Wall Street Journal Online. additional content by WARC staff