Division could be put up for sale

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FRANKFURT, Germany - With DaimlerChrysler AG putting all options on the table for its struggling U.S. unit, the auto industry is pondering the fate of Chrysler and whether its parent will jettison a brand that critics say has dulled the sheen of the legendary Mercedes marquee.

A worker installs a dashboard in a Jeep Cherokee at a Daimler-Chrysler assembly plant in Detroit. The company has already announced that it will cut 13,000 jobs in the U.S. and Canada and close a Delaware plant.  AP / File
AP / File
A worker installs a dashboard in a Jeep Cherokee at a Daimler-Chrysler assembly plant in Detroit. The company has already announced that it will cut 13,000 jobs in the U.S. and Canada and close a Delaware plant.

Speculation about potential partners, or even a buyer, jumping in to use Chrysler's expansive parts and dealership network to gain entry to the U.S. market has ranged from a tie-up with Nissan and Renault to talk of a link with Hyundai to a homegrown deal with General Motors.

The possibilities have driven DaimlerChrysler shares up by 12 percent since it first said it was mulling all options for the Chrysler Group. On Monday, the company gained almost 4 percent more to 56.26 euros ($73.88) in German trading, its highest level since July 2001.

DaimlerChrysler has kept mum after announcing last week that it had not ruled out any options for Chrysler - which, until a year ago, had kept the world's fifth-largest automaker profitable amid quality issues at the Mercedes Car Group.

A failure to discern American consumers' changing tastes for more fuel-efficient models instead of light trucks, however, led the German-American automaker to announce plans to eliminate 13,000 jobs in the United States and Canada, or about 16 percent of its work force, and shutter a plant in Delaware in a bid to shave costs.

DaimlerChrysler's fourth-quarter earnings plunged 40 percent on weaker demand at the Chrysler unit, where sales fell 7 percent. Chrysler lost about $162.8 million (124 million euros) in the fourth quarter and had an operating loss of 1.12 billion euros ($1.46 billion) for the year, compared with a profit of 1.53 billion euros in 2005.

Chairman Dieter Zetsche, who brought Chrysler back from the brink before taking over the entire company at the beginning of 2006, said last week that all possibilities were open for the Auburn Hills, Mich.-based unit.

"We do not exclude any option in order to find the best solution for both the Chrysler Group and DaimlerChrysler," he said.

How much the company might ask for Chrysler is not even certain, with estimates ranging from $5 billion to $13.7 billion, depending on factors that include pension liabilities, health care obligations and fair value for plants and material.

In contrast, Daimler-Benz AG paid $36 billion for the American icon in 1998.

The Times of London reported on its Web site Monday that U.S. investment bank JPMorgan Chase & Co. would start a 7 billion pound ($13.7 billion) auction for Chrysler and planned to send out memorandums to likely suitors.

The paper, which cited no sources, also reported that several interested bidders had already started due diligence on Chrysler in the weeks before DaimlerChrysler's Feb. 14 announcement.

The Wall Street Journal, meanwhile, reported that DaimlerChrysler was moving ahead with plans to sell or spin off Chrysler, citing two sources it did not identify.

The Journal said several large car makers from the U.S., Europe and Asia had approached the company, but it did not name them.


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