Zetsche's Chrysler Dilemma

The DaimlerChrysler CEO admits his U.S. unit offers few advantages, while Mercedes is poised for an upturn. Would they be better off apart?

It's a bittersweet first anniversary for Dieter Zetsche, who became chief executive officer of DaimlerChrysler (DCX) one year ago. Mercedes was bleeding red ink at the time. Today it is on the mend, with sales up 11% this year through August. First half profit was $162 million, compared with a loss of $1.2 billion a year ago. But Daimler's U.S. unit, Chrysler, is skidding toward a $1.26 billion loss in 2006—and hopes are fading that it will ever power big profits in the future. "It's up to DaimlerChrysler to prove that it can rebuild Chrysler or find a way to relieve itself of the burden," says Merrill Lynch auto analyst Stephen Reitman. "The clock is ticking."

To continue reading this article you must be a Bloomberg Professional Service Subscriber.