Automakers Idle Plants

D E T R O I T, Nov. 17 -- In a widely expected move that securesGerman control of the once-vaunted merger of equals,DaimlerChrysler’s supervisory board ousted the Americanhead of its Chrysler division today for a German and announced plans torestructure the business.

Meeting in extraordinary session, the board voted to replaceChrysler boss Jim Holden with Dieter Zetsche, effectiveimmediately.

The company also said earnings projections would fall belowforecasts, without specifying which period it was referring to, andthat the bottom line had been hurt by Chrysler.

And, in related news, General Motors and the Chrysler arm of DaimlerChrysler say they’ll idle five assembly plants next weekto reduce inventories of unsold cars and trucks.

Driving for a Turnaround“The dynamically changing market situation in the United Statesmakes it necessary for a new management team at the Chrysler groupto reposition and restructure the business,” DaimlerChrysler saidin a statement.

A new business plan will be presented in the first quarter of2001, the statement said. Besides naming 47-year-old Zetsche, theDaimlerChrysler board member for commercial sales, to run Chrysler,the supervisory board also announced appointed Wolfgang Bernhard aschief operating officer at the Chrysler group.

The company said the market situation has become more difficultsince third-quarter earnings were released, as seen by pricereductions, higher dealer stock and cuts in production.

“The Chrysler Group’s results will fall below the latestprognosis, and will therefore influence the concern’s bottomline,” the company statement said.

Analyst AnalysisAnalysts said it remains to be seen whether the changes willbring the sought-after turnaround.

“There’s no silver bullet or easy answer,” said Scott Merlis, an analyst with Wasserstein Perella Securities, of New York.

“The next year is going to be a tough environment for severalreasons. Industry production should drop 3 percent to 5 percent,and there is more competition from Japanese and European companiesin their high margin segments — minivans and SUVs.”