Daimler fails to ease separation anxiety
When DaimlerChrysler Chairman Dieter Zetsche arrived at the automaker’s annual meeting here Wednesday, he made a point of posing for photographs with a red Chrysler-built Avenger.
It was a gesture both obvious and inscrutable.
Zetsche created a stir in mid-February when he announced that all options were on the table concerning the future of Chrysler Group, the money-losing American automaker acquired by Daimler for $36 billion in 1998. That was widely interpreted as a sign that Chrysler was up for sale.
And in Wednesday’s speech to 9,000 restive shareholders, Zetsche confirmed for the first time that there had been talks with “potential partners” and that “we are open to all options.” But he provided no details -- an omission that didn’t sit well with some shareholders and analysts.
“Investors would have liked it better if Zetsche came across a bit more definitely about to whom will Chrysler be sold, when and, most important, for how much money,” said Anja Kohl, stock market analyst with the TV news show “Tagesschau.”
Zetsche, acknowledging that “many of you would like to have a progress report at this time,” asked for patience. But it was in short supply.
“What we are missing is a clear and fast execution of a Chrysler sale,” Hans-Richard Schmitz of the German Protection Assn. for Private Investors told business newspaper Handelsblatt.
Some shareholders are worried that unless Chrysler is jettisoned, its problems could drag down its parent -- the world’s fifth-largest automaker and home of the storied Mercedes-Benz nameplate.
“The Chrysler disaster has been going on already for eight years,” said Juergen Graesslin, spokesman of the Critical Shareholders of DaimlerChrysler. “If we don’t step on the brake right away, we’ll run with full speed toward the precipice.”
Like larger U.S. rivals General Motors Corp. and Ford Motor Co., Chrysler Group has been losing North American market share as many customers have switched from pickup trucks and sport utility vehicles to more fuel-efficient cars and crossover vehicles.
Declining sales and the cost of closing factories and shedding workers to bring production capacity in line with demand have hammered profit. Auburn Hills, Mich.-based Chrysler, which has fallen to fourth place in the U.S. market behind Toyota Motor Corp. of Japan, lost $1.46 billion last year.
Graesslin groused that DaimlerChrysler let Toyota grab the initiative in marketing fuel-sipping vehicles, particularly gasoline-electric hybrids.
“Those who miss the eco trend will not survive,” he warned.
One analyst said Zetsche’s reticence shouldn’t be interpreted as a sign that DaimlerChrysler might be having second thoughts about unloading its U.S. division, which includes the Dodge and Jeep nameplates.
“They’ve entered a one-way street, and it would be hard to reverse direction,” said Michael Raab, an analyst with Sal. Oppenheim in Frankfurt, Germany, who has a “buy” rating on DaimlerChrysler’s stock. “The market would be disappointed.”
Investor reaction was mixed. The automaker’s stock fell 1.3% in Frankfurt. But traders were more sanguine in New York, where DaimlerChrysler’s U.S.-traded shares slipped less than 0.5%.
At least three groups have been identified in media reports as potential buyers of Chrysler, including Canadian auto parts supplier Magna International Inc., which has reportedly submitted a bid to buy the business for as much as $4.7 billion.
Cerberus Capital Management and a consortium of investors led by Blackstone Group each have reviewed Chrysler’s finances and are expected to make bids.
The Detroit News, citing people close to the talks, reported on its website that all three had submitted formal bids to DaimlerChrysler, with a decision to be made on the bids by the end of April. The automaker did not comment on the report.
If Chrysler is sold, Daimler is unlikely to make back what it paid. Analysts have valued the unit at between nothing, because of pension and other liabilities, and $13.7 billion.
Even a fire-sale price might not upset investors fed up with the whole deal, which Henning Gebhardt, head of German equities at mutual fund manager DWS, likened to an unfortunate German-American culinary experiment.
Referring to a popular egg noodle dish, Gebhardt said, “The meal of spaetzle with burger didn’t taste good at all.”
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christian.retzlaff@latimes.com martin.zimmerman@latimes.com
Retzlaff reported from Berlin, Zimmerman from Los Angeles. The Associated Press and Bloomberg News were used in compiling this report.
