As Chrysler Group runs deep losses, the stamina of the German owner, DaimlerChrysler, is being questioned.
Will it stay the course, or is it already thinking of withdrawal? Here are some questions and predictions.
Q. Will the Germans really sell Chrysler one day?
A. Yes, it could happen, but no time soon; not as long at Dieter Zetsche is chairman of DaimlerChrysler. He came to Detroit and spent years here turning around Chrysler. That triumph propelled him to the top job in Stuttgart, and he's not likely to give up the scene of his victory.
Q. Why would the Germans sell?
A. Not because Chrysler is losing money or in trouble. Daimler will sell off Chrysler when the German side of the company is in deep trouble; when Mercedes is losing in Europe to Lexus or BMW; when it needs new capital to rebuild. Chrysler would be sold to save Daimler from its own errors over there, not because of losses over here.
Q. Who would be the buyer?
A. Despite Carlos Ghosn, Renault doesn't have the money to buy Chrysler, and Nissan has plenty of capacity in North America, well over 1 million units at plants in Tennessee, Mississippi and Mexico. What would be the point of adding more?
The buyer of Chrysler in the distant future will be an American, a man of immense wealth; someone like Bill Gates or Warren Buffet; someone who always wanted to own a car company (just as some men want to own a football team) or has a patriotic feeling about saving American manufacturing. If Chrysler is sold, it will come home and be private.
Q. Was the combination just a bad idea in the first place?
A. German auto makers have not done well recently in their foreign acquisitions. BMW's purchase of Rover was a disaster. DC's effort to join with Mitsubishi was another bad one, as well as its connection with Hyundai, which didn't work. But Volkswagen has done a bang-up job with Bentley and maybe even Lamborghini.
One problem is Chrysler always has been an up and down company, with huge profits today, huge losses tomorrow. The Germans don't like that. They insist on a steadily rising curve. So turning Chrysler around isn't enough; they must stabilize and keep it moving upward. No one's been able to do that yet.
Q. What's the auto maker doing right?
A. The “Dr. Z” ad campaign aimed at convincing Americans that Chrysler vehicles are receiving superior German engineering and technology. Some observers think the campaign was a failure, but I say it is the start of something important if Chrysler sticks with this message.
Conversely, I find it hard to believe Daimler sends people to Detroit to tell Chrysler how to cut costs. That's because nobody spends like Mercedes. They even think the 40-hour work week is too long. That's like asking Paris Hilton to cut the bar bill.
Jerry Flint is a columnist for, and a former senior editor of, Forbes magazine.
