The sale of Jaguar and Land Rover to Tata means that the two British marques will have to look elsewhere for the parts normally supplied by Ford. Following the news that Daimler could be a supplier to both automakers comes word from Dr. Z himself that a deal is a distinct possibility.
Daimler holds a seven-percent stake in Tata Motors, which could make an easy case for Mercedes to supply Jag and L.R. with the necessary components to wean them off of Ford. Dieter Zetsche told Auto Motor und Sport that, "If Ratan Tata approaches us regarding the supply of components, we would be open to talks." AMG-powered XF, anyone?
[Source: Auto Motor und Sport via Automotive News – Sub. Req.]
Click on the image to view high-res shots of the Mercedes F700 concept
Massive amounts of money are being spent in the alternative energy sector of the automotive industry. Last year, Daimler spent $6 billion in research and development and another $2.7 billion on environmental protection. Expect those already rather large sums to increase in the coming years. Daimler CEO Dieter Zetsche says that the company will "increase these budgets even more and by 2010 we'll invest $21 billion in research and development." Daimler has invested heavily in hydrogen technology and holds twenty-five patents protecting new battery technology for automobile use. Further development will continue to cost a large chunk of change.
Of particular interest is the fact that Daimler intends "to offer at least one model in each of the Mercedes-Benz core model series that is a leader in fuel consumption," according to Zetsche. Despite looming legislation that will require more fuel efficient vehicles, Mercedes-Benz plans on continuing to offer vehicles that will meet the size, performance and luxury demands prospective buyers have come to expect from the premium German marque. Otherwise, it won't be $21 billion well spent.
Daimler will take the next two years to decide whether to invest more in its failing Maybach flagship marque or else shut it down. This comes from the mouth of Daimler and Mercedes chief Dr. Dieter Zetsche, who inherited the problem-child brand from his predecessor, ex-CEO Juergen Schrempp.
After ditching Chrysler, another deal that was orchestrated by Schrempp, Dr. Z may be inclined to shut down Maybach, too. By all accounts the ultra-premium brand has not been a sales success, barely reaching ten percent of its original sales forecast. In speaking with TheCarConnection.com, however, Zetsche insisted that Maybach's profitability "does not matter" in the face of demonstrating Mercedes' capability of competing with archrival BMW's pinnacle Rolls-Royce (and Volkswagen's Bentley), but that may prove to be all talk if Maybach doesn't present a solid business case. Zetsche confirmed that there are currently no plans on the table for new Maybach products – cutting short speculation over a new baby Maybach positioned between the current 57 and the Mercedes S-Class – and that even the outrageously-priced 62 Landaulet was unlikely to make much headway in turning the brand's fortunes around. We guess P.Diddy and his crew will have to find another ride.
Daimler CEO Dr. Dieter Zetsche offered a choice quote to his nation's leading weekly news mag, Der Spiegel, when he mentioned that the automaker would be open to developing an engine with the company's cross-town rival, BMW. Apparently, Daimler is in talks with several companies about joint projects, but as of now, nothing is set in stone.
The idea of a co-developed engine between the two German heavyweights is an interesting idea, especially if both manufactures begin to focus their efforts on some form of innovative propulsion. More turbos? New fuels? Pixie-dust power? Who knows?
With the sale of Chrysler nearly complete, the folks in Stuttgart are looking for a new name to represent the automaker formerly known as Daimler Chrysler. Company executives would like to call the company Daimler AG, but others want the company name to once again include both 'Daimler' and 'Benz' to reflect both of the company's original founders, Gottlieb Daimler and Carl Benz. CEO Dieter Zetsche has instead proposed changing the name of all manufacturing plants from Daimler to Mercedes as a compromise. We'd like to point out that none of luxury cars the company produces is called Daimler anyway, so why hold on to that part of the name? In any case, the final name will be decided at the October 4 shareholder meeting in Berlin.
It seems obvious now, but the sale of Chrysler leaves Mercedes Benz in a similar position as it's cross-country rival, BMW. Back when BMW bought the ailing MG-Rover marque, the results, to say the least, were less than positive. When the dust finally settled after the sale of Rover in 2000, the automaker had dropped billions of dollars into the company with little to show for the expenditure.
According to an article in Welt am Sonntag, Daimler CEO Dieter Zetsche was quoted as saying that, "there are no acquisition targets I can recognize that could strengthen Mercedes." Obviously, Dr. Z has learned from his own company's past missteps, and will lead Mercedes into the future without the help of new brands to bolster its catalogue of cars.
In the end, the acquisition of Chrysler did little to enhance either automaker's image. Whether it was quality, engineering prowess or long-term growth, the consolidation glut of the past 10 years may have finally come to an abrupt, if not entirely predictable, end. No surprise, as bigger has often proven to be not necessarily better when it comes to the automotive industry.
Project X has now officially been renamed the Recovery and Transformation plan by the Chrysler Group, which plans to reduce its workforce by 13,000 people between now and 2009. About 11,000 employees will be hourly workers, while 2,000 will be salaried employees. In addition, total production capacity for the Chrysler Group will be reduced by 400,000 units per year, aided by the immediate elimination of shifts at its Newark Assembly Plant and Warren Truck Plant, along with cancelling a shift at its St. Louis South Assembly Plant in 2008. In 2009, the Newark Assembly Plant will be completely idled. There's also the standard restructuring moves you'd expect in the plan, like reducing the number of dealers, selling less to fleets, and offering retirement and attrition packages to current workers not affected by the layoffs.
Chrysler Group hopes the R&T plan will return the company to profitability as early as 2008. It's main weapon is cost reduction by the aforementioned layoffs and plant closings. The idea seems to be that if the company can reduce costs enough, its operating profit can offset the quarterly losses it will be facing in the near term.
It's not all slash and cut though, as Chrysler also announced a $3 billion investment in new engines, transmissions and axles that will focus on producing more fuel efficient power and drivetrains. One such product will be a dual-clutch transmission it's commissioned Getrag to produce and a new V6 engine dubbed "Phoenix". There's a slew of BLUETEC diesel vehicles on the horizon, and the 2008 Dodge Durango will host the company's first two-mode hybrid, as well.
One item of note in the press release issued is DaimlerChrysler CEO Dieter Zetsche's statement that, "we do not exclude any option in order to find the best solution for both the Chrysler Group and DaimlerChrysler," which some analysts have taken to mean that selling off the Chrysler Group wholesale is still on the table as a viable option.
Check out the Chrysler Group's full press release after the jump for all the nitty gritty details, and let us know in the comments whether or not you think the Recovery and Transformation plan has what it takes to turn Chrysler around.
We have more details on the rumored restructuring plan that the Chrysler Group is expected to announce on February 14th. First, it's dubbed internally as "Project X", which must mean it involves chimpanzees and large doses of radiation. In addition to radiated chimps (we're kidding, click the link for the punchline), Automotive News is reporting that the plan will likely involve cutting 10,000 factory jobs and closing the Newark Assembly Plant that builds the Dodge Durango and Chrysler Aspen, as well as the an engine plant in Detroit that we believe makes the 4.7L V8 motor for Jeep and Dodge. The ultimate goal is reportedly to make the Chrysler Group smaller, more efficient and more closely alligned with Daimler-Chrysler and Mercedes-Benz. The restructuring plan sounds similar to those currently being implemented by General Motors and Ford, though smaller in scale. For its part, Ford learned a valuable lesson not cutting deep enough the first time around, so we're eager to see if the Chrysler Group comes back for a second round of cuts, as well.
Chrysler Group CEO Tom LaSorda travelled to DaimlerChrysler's headquarters in Stuttgart, Germany, last Wednesday to present a restructuring plan to the company's management board. The Detroit News reports that the plan will involve job cuts and and the closing of at least two plants in the U.S. The plan will be reviewed by the DCX management board and likely announced in February when the company reveals its performance numbers for 2006, which analysts expect to be billions in the red.
Just like Ford with its Way Forward restructuring plan, Chrysler needs to trim down the production side of its business to meet lower demand for its vehicles that led to a loss of $1.5 billion in Q3 of 2006. In addition to shrinking its production capacity, any analyst will tell you that Chrysler also needs more small cars in its lineup, which at the moment is overrun with trucks, minivans and SUVs.
Though the Chrysler Group is still run by Tom LaSorda, many are speculating that Dieter Zetsche wants to bring back his guy pal Wolfgang Bernhard, current head of the Volkswagen brand, to run the stumbling automaker. Other initiatives that are already happening include bringing in executives from Mercedes-Benz to the Chrysler Group reduce the cost of each vehicle it produces by $1,000. Clearly DaimlerChrysler is putting effort into fixing what's broken at the Chrysler Group, though some analysts speculate that the restructuring plan announced in February will be its last attempt before selling off the automaker it had "merged" with back in 1998.
The Chrysler Group is looking for advice from other DaimlerChrysler divisions on how to cut the cost of each vehicle it produces around $1,000 on average. DaimlerChrysler CEO Dieter Zetsche told CNBC in Paris that executives from Mercedes-Benz in particular were helping put together a plan to make the cost cutting happen. The group advising Chrysler CEO Tom LaSorda also includes execs from the company's commercial vehicle operations and some outside consultants.
There are more than a few ways to cut down the cost of the vehicle. Chrysler could close some plants and reduce its excess capacity, a strategy adopted by Ford in its Way Forward plan. Rumors that a Chrysler plant in Newark, Delaware producing the Dodge Durango and Chrysler Aspen could close are out there, which makes sense in light of the automaker's admission it will lose $1.5 billion this quarter because it didn't anticipate the SUV's fall from grace. Chrysler's health care costs for its U.S. workers also adds $1,400 to the price of every vehicle, but the United Auto Workers has already closed the door on giving the automaker any concessions. So where is Chrysler going to scare up a grand per vehicle? Other possibilities include reducing its white-collar workforce, investing in more efficient production techniques, and the last resort, skimping on the cars and trucks it sells by reducing the level of standard equipment offered while holding the price and using less expensive materials.
If Chrysler succeeds, the profit it makes per vehicle would rise from $144 to a margin just below that of Toyota or Honda, the industry leaders in bucks made per vehicle.
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