Daimler ponders Chrysler split; Magna interested in unit

DETROIT — Germany’s largest vehicle manufacturer wants a divorce from its North American partner, enticing a Canadian auto parts giant to make a move.

After weeks of swirling rumors, DaimlerChrysler confirmed for the first time that it’s negotiating with several bidders for its struggling American car unit — signaling a likely end to the 10-year marriage. Daimler didn’t name possible suitors, but the Globe & Mail is reporting today that Canada’s Magna Corp. is one of three companies interested in making a move on Chrysler, which lost $1.5 billion in 2006.

Slumping SUV sales have severely hurt
Chrysler in the last few years.

“I can confirm that we are talking with some of the potential partners who have shown a clear interest,” DaimlerChrysler CEO Dieter Zetsche told thousands of shareholders at a conference in Berlin. “So far, I am satisfied with the process. Everything is going according to plan.”

According to several media reports, many shareholders seemed visibly agitated about the lack of details.

Chrysler is in the midst of an ongoing recovery plan to stem losses, including cutting production and laying off 13,000 North American workers.

According to the Globe, a proposal from Magna could involve an investment in the division in return for a closer partnership that could increase “the amount of vehicle assembly it does for Chrysler or taking on a greater management role at some Chrysler facilities.”

DaimlerChrysler, which also owns (and intends to keep) Freightliner Trucks and Detroit Diesel in North America, is Magna’s largest customer. Chrysler alone itself generates about 15 percent of Magna’s sales.

The company, like other American carmakers, is hurting from a downturn in the North American market, especially large pickup and SUV sales. It is also seeing increased competition from Japanese companies.