Chrysler in crisis as DCX talks with GM and Hyundai

GENERAL Motors and Hyundai are believed to be in buy-out talks with DaimlerChrysler AG over its struggling US affiliate, Chrysler Group.

The takeover talks come as the Chrysler Group last week announced plans to cut 13,000 jobs by 2009 – a reduction of 16 per cent of its workforce – as well as close its Delaware plant, cut shifts at other plants, slash production by 400,000 units annually and spend $US3 billion on new, more fuel efficient engines and transmissions.

Chrysler plans to introduce 20 all-new and 13 refreshed vehicles from 2007 to 2009.

The bold action is part of Chrysler’s "transformation plan" announced last week, after it incurred a $US1.4 billion loss last year.

Despite the company’s upbeat focus on the revival, the prospect of GM and Hyundai owning Chrysler has dominated the news this week, fuelled by a comment made by DaimlerChrysler chairman of the board of management Dieter Zetsche.

"The Chrysler team worked out a comprehensive recovery and transformation plan using all resources within DaimlerChrysler," he said.

"In addition to that, and in order to optimise and accelerate the presented plan, we are looking into further strategic options with partners beyond the business co-operation partners mentioned.

"In this regard, we do not exclude any option in order to find the best solution for both the Chrysler Group and DaimlerChrysler." DaimlerChrysler Australia spokesman David McCarthy this week hosed down speculation surrounding the GM buy-out, claiming that while "anything is possible" he had not heard anything either official or unofficial.

"Because there hasn’t been a statement that Chrysler is absolutely not for sale, people assume it is for sale," he said. "It doesn’t make a lot of sense and if there was someone wanting to buy Chrysler I think GM would be a fair way down the list.

"There would be lots of other companies that would be more interested, and that’s not to say anyone is..." For the moment, Mr McCarthy said the full Chrysler focus was on the "transformation plan", which also commits Chrysler to doubling international sales from its 2006 total and reach 400,000 units by 2012.

A spokesperson for GM Holden said any response about the talks would have to come from GM itself.

Chrysler is committed to its redesigned business model for long-term competitiveness, exercising a greater emphasis on fuel-efficient products, global growth and partnerships.

In Australia, the Chrysler Group continues to grow with 2006 sales 20 per cent up on 2005 levels, thanks largely to the 300C sedan and the strength of the Jeep brand.

Chrysler Group Australia also expects impressive growth this year with its most aggressive product offensive ever, including eight all-new vehicles bringing the local line-up to 18.

Overall, the plan aims at a return to profitability with a primary focus on costs.

It is structured to deliver a target of $US4.5 billion of financial improvements – or a return on sales of 2.5 per cent – by 2009.

Key parts of the transformation will be a greater global footprint and a shift to smaller, more fuel-efficient vehicles.

Currently, North America represents about 90 per cent of the Chrysler Group’s business, and its product line-up has been heavily weighted toward minivans, trucks and SUVs.

Among its product and equipment initiatives, Chrysler has signed an agreement with German gearbox supplier Getrag to develop a "dual clutch" transmission.

As part of that powertrain offensive, the company is also developing a new V6 engine platform – dubbed "Phoenix" – which will help it reduce the number of six-cylinder engine families from four to one.

Chrysler will also introduce its first two-mode full hybrid with the 2008 Dodge Durango and expand its line-up of diesels.