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Last Updated: Tuesday, 6 March 2007, 23:47 GMT
Who is going to buy Chrysler?
By Jorn Madslien
Business reporter, BBC News, Geneva motor show

Chrysler jeep
The rocky situation leaves Dr Z with few options

Less than a month after announcing that the US car maker Chrysler is for sale, it seems increasingly likely that Dieter Zetsche will have to fix it first.

And he may have to do it himself.

The walrus-moustached German automotive executive has whipped Chrysler back into shape before, and there is every chance he can do it again if he puts his mind to it.

During an interview with a group of journalists at the Geneva motor show, Dr Z - as the chief executive of DaimlerChrysler is fondly known - insisted that he is "confident of the success of the plan announced three weeks ago".

But given what he said at the time - that "all options will be considered" - he can hardly be deemed a failure if he fails to find a buyer for Chrysler.

After all, the option of keeping the loss-making US division of DaimlerChrysler, which clocked up a near $1.5bn (776m) operating loss in 2006, was never ruled out.

Tricky pitch

It is nevertheless tempting to think that things are not working out according to plan for Dr Z

It would be a risky move for any bidder, given the difficulties to turn Chrysler around
Chen Qiaoning, automotive analyst, Tianxiang Consulting

An already announced restructuring plan that involves some 13,000 job cuts and the closure of one Chrysler plant could bring the division back in the black by 2008, Mr Zetsche believes.

This is a carrot that, at least on the face of it, should tempt many a rival in the car industry to start making offers.

Yet no bidding war emerged after Mr Zetsche announced the giant fire-sale.

Instead, car company after car company have ruled themselves out.

Some analysts describe Chrysler as a "dinosaur" that is heavily dependent on sales of "gas guzzling" sports utility vehicles that are quickly falling out of favour with drivers.

Thus it is not a tempting option for European firms such as PSA Peugeot Citroen, Renault Nissan, Fiat, Volkswagen or BMW; they have all said they are not interested.

Jobs at stake

Dieter Zetsche
Dr Z is considering his options

Korean car making giant Hyundai, which also owns Kia, has also ruled itself out.

And a string of Chinese car firms, including SAIC, FAW and Chery, have decided not to step into the limelight, in part due to concerns about how American car buyers would take to a Chinese-owned Chrysler.

"Americans are already complaining loudly about moving jobs to developing countries," says Zhang Xin, automotive analyst with Guotai Junan Securities.

"I don't think the union or the politicians there would let more jobs go to China in the Chrysler case."

"It would be a risky move for any bidder, given the difficulties to turn Chrysler around," agrees Chen Qiaoning, automotive analyst with Tianxiang Consulting.

Generally interested

The only car maker that appears to be still in the frame is General Motors, though the chief executive of the world's largest car maker by volume remains mum on the issue.

Rick Wagoner
GM is the only car firm that seems interested in Chrysler

"There's nothing we want to say about it," said an unusually media-shy Rick Wagoner during the first press day at the Geneva motor show.

However Mr Wagoner also conceded that consolidation in the car industry is likely.

"You're going to have to see manufacturers work together in some fashion," he said.

Much uncertainty

For Mr Zetsche, the main problem is that Mr Wagoner is unlikely to want to pay very much for Chrysler.

Other potential buyers would include various private equity investors, which are commonly accused of being ruthless asset strippers.

Dr Z finds it natural that private equity firms are keen to buy Chrysler, since - he insists - Chrysler's underlying value is greater than that put on it by the stock market.

That is a situation that can only be reinforced as both Chrysler's sales performance and its market value continue to suffer the longer the uncertainty about its future remains.

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