Feb. 14 (Bloomberg) -- DaimlerChrysler AG said it may sell or seek partners for its unprofitable Chrysler unit, abandoning its vision of building a carmaker that could thrive by selling luxury Mercedes-Benz sedans as well as Dodge pickup trucks.

``All options are on the table,'' Chief Executive Officer Dieter Zetsche said today at a press conference in Auburn Hills, Michigan. Chrysler will cut 13,000 jobs, or 16 percent of the workforce, and close a factory in Delaware, he said.

The U.S. company's sales and market share have declined since DaimlerBenz CEO Juergen Schrempp engineered the 1998 takeover with Chrysler Corp. chief Robert Eaton. DaimlerChrysler shares have dropped by almost a third since then.

``We want to ensure that the core of Daimler can be protected from a possible financial downwards spiral at Chrysler,'' said Erich Klemm, the company's head workers' representative in Germany and deputy supervisory board chairman, in an e-mailed statement. ``It's clear that the synergy potential between Mercedes-Benz and Chrysler is limited.''

U.S. shares of DaimlerChrysler reached their highest level since January 2000, rising $5.33, or 8.3 percent, to $69.78 at 4.18 p.m. in New York stock Exchange trading. The increase was the biggest since July 2005.

'End in Sight'

``At some point investors want to see that the end is in sight,'' said Juergen Pieper, an analyst in Frankfurt at Bankhaus Metzler, which oversees about $39 billion in assets.

The merger began in the stock market boom of the late 1990s with the promise of a global reach that would seize on years of combined expertise on two continents. Almost immediately, the combination was challenged by billionaire Kirk Kerkorian, who expressed doubt at the strategy and sued for better terms for Chrysler shareholders.

Chrysler's performance moved from a $5.1 billion operating profit in 1999 to a $4.7 billion loss in 2001. Former CEO Schrempp was heckled at annual meetings by investors who demanded he sell the division.

Zetsche was dispatched to the U.S, where he cut 40,000 Chrysler jobs. The effort led to profits in 2002, 2004 and 2005.

The losses returned last year as Chrysler failed to keep up with Japanese automakers Toyota Motor Corp. and Honda Motor Co. in vehicle quality and fuel efficiency. Chrysler lost $1.46 billion and its U.S. sales fell 7 percent on slowing demand for pickups like the Dodge Ram and the aging Chrysler Town & Country minivan.

Market Share

Chrysler's U.S. market share dropped to 12.9 percent from 13.6 percent in 2005. Toyota's share rose to 13.4 percent from 11.5 percent and Honda's to 7.9 percent from 7.4 percent.

Renault SA and Nissan Motor Co. may be a possible partner for Chrysler, said John Casesa, an analyst at Casesa Strategic Advisors in New York. General Motors Corp. considered an alliance with the companies, both headed by Carlos Ghosn last year before deciding to continue its reorganization alone.

DaimlerChrysler is in talks with General Motors to sell Chrysler to the world's largest carmaker, German business publication Manager Magazin reported today, citing unidentified company sources. The talks are at ``an early stage,'' it said.

Zetsche declined to comment during the press conference. GM spokeswoman Renee Rashid-Merem declined to comment.

Chrysler plans to close a factory in Newark, Delaware, in 2009 and a parts-distribution center in Cleveland. It also will reduce shifts at plants in Michigan and Missouri. The automaker will also reduce its 32 Dodge, Jeep and Chrysler nameplates, Chrysler CEO Tom LaSorda said, declining to be more specific.

Trucks, SUVs

About half of the vehicles Chrysler makes are sport- utilities and pickup trucks. The company last year attempted to reduce that dependence with new vehicles such as the Dodge Caliber compact car and plans for a Chinese-built small car.

The Caliber is the only compact that Chrysler Group sells. Nine of 14 Dodge-brand vehicles are trucks or SUVs. The best fuel economy of all Chrysler Group vehicles is the Caliber's 32 miles per gallon (7.8 liters per 100 kilometers) on the highway.

Zetsche, 53, is counting on new models like the Caliber to return the company to profit next year. Chrysler's 1.53 billion euros in operating profit in 2005 is a ``benchmark,'' he said on Feb. 3. Chrysler employed about 83,000 people at the end of that year, about a third less than at the time of the merger.

DaimlerChrysler today said fourth-quarter net income fell 40 percent to 577 million euros ($757 million) from 966 million euros. Revenue dropped 1.9 percent to 40.7 billion euros. Analysts surveyed by Bloomberg expected net income of 726 million euros in the quarter.

Full-year group net income rose to 3.2 billion euros from 2.8 billion euros, the company said in a statement. Revenue gained 1 percent to 151.6 billion euros.

Credit-default swaps-based on 10 million euros ($13 million) of Daimler debt fell 3,000 euros to 44,000 euros, according to Deutsche Bank AG. Credit-default swaps are based on corporate bonds and are used to speculate on a company's ability to repay debt. A decrease indicates an improvement in credit quality.

To contact the reporter on this story: Jeremy van Loon in Berlin at jvanloon@bloomberg.net

Last Updated: February 14, 2007 17:46 EST