Chrysler Head Ousted in Shakeup
Nov. 17, 2000
FRANKFURT, Germany (AP) _ DaimlerChrysler's supervisory board on Friday ousted the head of its Chrysler automaking division and announced plans to restructure the money-losing business.
Meeting in extraordinary session, the board voted to replace Jim Holden, an American, with Dieter Zetsche of Germany. The move had been widely rumored in recent days.
DaimlerChrysler said it also expects worse financial results from the Chrysler division in the fourth quarter than it had previously forecast.
``The dynamically changing market situation in the United States makes it necessary for a new management team at the Chrysler group to reposition and restructure the business,'' DaimlerChrysler said in a statement.
The new program will be presented in the first quarter of 2001, the statement said.
The company said Zetsche, 46, will take over as president and chief executive of the Chrysler division immediately.
The market situation for Chrysler has become more difficult since third-quarter earnings were released, DaimlerChrysler said, citing continuing sales incentives, more unsold cars on dealers' lots and cuts in production.
``The Chrysler Group's results will fall below the latest prognosis, and will therefore influence the concern's bottom line,'' the parent company said.
In mid-afternoon Friday trading in Frankfurt, DaimlerChrysler stock was down 3 percent at 49.90 euros ($42.69).
Chrysler's performance hasn't met Stuttgart-based DaimlerChrysler's expectations, as sales incentives have eroded profits and production of the hot new PT Cruiser falling short of demand. Daimler and Chrysler also have been reluctant to share parts to cut costs.
Holden had headed the Chrysler division for about a year, and was under growing pressure to stem the division's losses. DaimlerChrysler's U.S.-based unit lost $512 million in the third quarter, its first operating loss in nine years, and the company's stock price is near its 52-week low of 49.60 euros.
Sales of Chrysler, Dodge and Jeep vehicles have been erratic in recent months, with several models posting large declines.
In an effort to move those vehicles off the lots, Chrysler has embarked on a breakneck incentive campaign coaxing consumers with ever-changing sales and bargains. Holden has said at the same time that Chrysler has been unable to raise prices due to stiff competition in the U.S. market.