All eyes on DaimlerChrysler?

16/02/2007
NEWS STORY

Regular readers will be entirely familiar with Mike Lawrence's mantra that we should always Follow the Money....

With this in mind it's worth noting that Daimler Chrysler is facing an uncertain future, with the possibility of Chrysler splitting off from Daimler just nine years after the original merger.

On Wednesday, Daimler Chrysler admitted that it was considering "all options" regarding Chrysler, as it announced 13,000 job losses in the US and Canada. To put this in perspective, this accounts for around 16 percent of the company's global workforce.

With Chrysler thought to be worth just under £7 billion, DaimlerChrysler chief executive Dieter Zetsche, admitted that his company was considering all options, adding: "We do not exclude any option in order to find the best solution for both the Chrysler Group and DaimlerChrysler."

He then admitted that DaimlerChrysler has sought the advice of JPMorgan, while reports elsewhere suggest that preliminary talks have already taken place with General Motors. This comes months after DaimlerChrysler denied that Chrysler was for sale, Zetsche referring to the denial by saying: "At that time, there were no other options for the group, therefore we had to stop speculation."

To put Chrysler's problems in perspective, after reporting a profit of £1 billion in 2005, in 2006 the company saw a loss of £739m.

The news is the latest in a long line of problems for the car industry in America, as car manufacturers, like Bernie Ecclestone, look East.

However, although DaimlerChrysler is doing fairly well in Germany, the news highlights the troubles facing many of the car manufacturers. With this in mind it will be worth watching the situation in order to see if it has a knock-on effect on F1.

The car manufacturers are not in F1 for altruistic reasons. Although there is some technological spin-off - more should Max Mosley's plans for a 'Green Formula' come in to effect, the biggest bonus from F1 is the publicity. However, that publicity means success, which means winning titles.

To shareholders and bean counters it means diddly squat that the team won two rounds of the world Championship. they want to see the success of title victories pay off on the showroom floors and forecourts.

To the shareholders and beancounters F1 is a luxury they can do without, and expensive luxury. And as men and woman lose their livelihoods they too will point to teams fighting for fifth and sixth in the World Championship and ask, "what's the point, where's the justice?"

There is already speculation that DaimlerChrysler is miffed - perhaps a stronger word would be more appropriate - that McLaren opted to sell a 30 percent stake to the Kingdom of Bahrain's Mumtalakat Holding Company. Leaving DaimlerChrysler with 40 percent in its hands and what appeared to be a small amount of egg on its face.

As Mike says, "Follow the Money".

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Published: 16/02/2007
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