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Thursday, Oct. 25, 2007

After Chrysler flop, Daimler focuses on quality, not quantity


Staff writer

CHIBA — The recent breakup of Daimler and Chrysler, whose stunning marriage in 1998 was intended to achieve economies of scale, resulted instead in reduced production on both sides.

News photo
Dieter Zetsche

Annual production at Daimler, which completed the separation in August and officially dropped Chrysler from its name earlier this month, will drop by nearly half, but Daimler AG Chief Executive Officer Dieter Zetsche said Wednesday the automaker can be successful even without high volume.

"Certainly, the economy of scale is one aspect which helps profitability, especially in the volume segment, but (it's not a decisive factor for) the premium segment," Zetsche told reporters at the 40th Tokyo Motor Show, which opened to the press Wednesday.

Zetsche, however, did not rule out collaborations with other carmakers in developing specific technologies and components, but he said no agreement has been reached with any company.

Rising costs of materials and cutting-edge technology development have prompted some automakers to join up on specific projects. Daimler is involved in an ongoing program with BMW AG and General Motors Corp. to develop hybrid technology.

The merger with financially troubled Chrysler ended in failure, but Daimler still retains about a 20 percent stake in Chrysler Holding LLC to continue cooperating in parts procurement and other projects.

Now that it is once again a stand-alone company, Daimler has aggressive plans for the future backed by growing worldwide sales of its Mercedes-Benz luxury cars, not least in Japan.

"The Mercedes-Benz car (segment) is expected to significantly exceed its target of having a 7 percent return on sales in 2007," Zetsche said, adding that the company now hopes to increase that figure to 10 percent by 2010.

Daimler sold about 830,000 Mercedes-Benz cars worldwide between January and September, up 3 percent from the same period a year earlier.

However, competition in the world's luxury car market is intensifying with BMW expanding sales globally.

In 2005, BMW replaced Mercedes Car Group as the No. 1 luxury automaker in terms of sales volume, with 1.33 million units worldwide, and has since held the top position.



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