Chrysler Case Study

A Marriage Made in Hell

Daimler Ponders How to Divorce Chrysler

DaimlerChrysler CEO Dieter Zetsche didn't get much sleep last Tuesday night. At 3 a.m. he and other senior managers received a call in their hotel rooms from one of the company's lawyers to inform them about news reports that the group was planning to separate itself from Chrysler. The lawyer wanted to know how to respond to the reports. Only four hours later, at a board meeting at Chrysler headquarters in Auburn Hills, Michigan, Zetsche found himself facing tough questions from Chrysler's board members. They wanted Zetsche to tell them what Chrysler's chances of surviving are, and how realistic the latest restructuring plan for the US subsidiary is. But the one question none of the board members asked was whether CEO Dieter Zetsche, who managed -- and supposedly cleaned up -- the Chrysler subsidiary from 2000 to 2005, should resign. After all, it was Zetsche's supposed successes at Chrysler that had once qualified him to succeed former CEO Jürgen Schrempp and assume the chairmanship of the entire company. Seen in this light, the basis for Zetsche's move up the corporate ladder at DaimlerChrysler suddenly looked a little shaky. To stand a chance of survival, the ailing US subsidiary is being restructured once again, a move that means the loss of 13,000 jobs and the closure of a plant. And now that Zetsche has admitted that even these drastic measures will probably not be sufficient, the board is looking into the possibility of separating the two companies once again. Chrysler's problems have been widely known since last October, when the company reported billions in losses and a board member was quoted by DER SPIEGEL as saying: "We would be completely thoughtless if we were not preparing an exit strategy." But the group denied any such plans at the time. Last week Zetsche officially admitted that "all options are on the table," thereby eliminating any taboos about the issue. What is left of the...