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from a story in the Detroit News

DaimlerChrysler AG's Chrysler Group expects to have a cost-cutting plan in place by the end of the year and should be ready to detail specific actions early next year, DaimlerChrysler Chairman and former Chrysler CEO Dieter Zetsche said in an interview Wednesday.
His comments came hours after DaimlerChrysler reported third-quarter earnings, which included a $1.48 billion loss at Chrysler after 12 quarters in the black following a Zetsche-led turnaround early in the decade. The red ink is the result of declining sales of Chrysler's trucks and SUVs as consumer demand shifts to more fuel-efficient models. The sales slump has created a stockpile of unsold models, forcing Chrysler to cut production and push dealers to take vehicles they may struggle to sell.

Zetsche talked to the News about Chrysler's financial situation and the challenges the automaker faces to get back on track. Here are some excerpts:

Q : How long are you giving Chrysler management to turn this around and what role will you play?

A : There is no one else who could improve the situation at Chrysler and bring them back on track but Chrysler itself with its management. You can't on remote control run a company.

The first phase we're in right now is to analyze the situation and to put together a plan.

Obviously we can't take forever to define that plan. On the other hand, there should be some substance and it should be reliable, therefore it doesn't make sense, either, to stop after a week and say "I've got it".

Sometime towards the end of the year we should start to get a clear picture within the management and sometime in the beginning of next year we should be at a point where we can inform the public about what we will be doing.

Q : How did Chrysler's Project Refocus initiative (to cut costs by $1,000 per vehicle) get started and what does it entail?

A :That task was defined and set up by (Chrysler CEO) Tom (LaSorda) roughly two months ago. It addresses all variable costs included in the vehicle. The one thing we will not do is cheapen the vehicle by just taking content out, but find innovative solutions -- how to do more with less. We need some redesign, we need process improvements in our own value chain, which means in our production, as well as in the supply part of our product. That's this project and the teams are working on it and already starting to see results. That's part of the plan that we have put together.

Q : Some dealers have said they're concerned about the pressure on them to take more vehicles, that they're not convinced Chrysler will be able to reduce inventories and that the company could take another financial hit in the fourth quarter as a result. What is your response to those concerns?

A : The information I got on the recent road show Chrysler did with its dealer body throughout the nation was that there were very good meetings (and) more critical meetings, supportive dealers (and) more critical dealers.

I was not present, but the information I'm getting is that the overall reaction from the dealer body was clearly a consensus, positive reaction to the decision of Chrysler to cut back production. In the end it's simple math: you produce X, you sell Y and the difference between both reduces your inventory or increases it. We have discussed with dealers our market share objectives, which we think are realistic, and obviously the sales rate at the end of the day will define if Chrysler accomplishes its inventory targets. That's a task where the dealers and Chrysler are in the same boat and the two together have to accomplish.

Q : Some Chrysler dealers are frustrated because they feel they're being forced to sell vehicles that the company overproduced. A fair amount of that frustration is aimed at (sales and marketing chief) Joe Eberhardt. Is his job at risk?

A : Generally in business you don't have an insurance policy for your job for eternity, that's clear. So overall, of course, we all have to perform. (But) there's no question mark in this regard whatsoever for the time being.

With oversupply you get significant excess inventory and push back by the dealer body (to) the costs associated with this excess inventory. Everybody understands that's not a good situation. But to push the dealers to sell is in itself not a bad thing. You have to find the balance.

Q : How frustrating is it for you personally to have Chrysler in this situation again after having executed a well-regarded turnaround plan?

A : We saw the progress and clearly saw our much improved competitiveness in relation to the other guys around town. Even though in some comparison we still look very good, we clearly are not where we have been a year or two ago. That of course is frustrating in itself and even more frustrating when you have emotional links.

Q : Is a major restructuring a possibility if Chrysler's full-year loss is more than the expected $1.3 billion?

A : We're striving to come to the results we mentioned. And if there are different outcomes, then obviously we would have to discuss that.

But totally independent of that, as the current level is not satisfying, we are working on the plan for the future. I can't tell you what this plan will contain before the plan has been put together and presented by Chrysler to the whole management.
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