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DaimlerChrysler CEO sticks to 2006 profit forecast

Written by: Staff

TOKYO, July 5 (Reuters) DaimlerChrysler AG Chief Executive Dieter Zetsche said on Wednesday the German-US auto maker was sticking to its forecast for an operating profit of more than 6 billion euros for 2006 despite sales difficulties at its US Chrysler division.

''The composition of our profit for 2006 between the divisions has changed a little bit -- some are doing a little bit better and some a little worse. But the guidance is unchanged,'' Zetsche told international media at a roundtable meeting in Tokyo.

Chrysler, the only U.S. car brand that grew in the world's biggest car market last year, is facing a bloated inventory of unsold vehicles as drivers migrate to Japan's top brands, which on average have a more fuel-efficient fleet of cars.

Sitting on unsold inventory of 91 days, Chrysler has had to resort to the biggest discounts of any car maker this year, combining employee-level pricing with zero percent financing and a 30-day money-back guarantee.

Its U.S. sales in June plunged 15.5 percent from the year before, hit by high gasoline prices, putting its market share at 12.4 percent. Toyota Motor Corp.'s sales, in contrast, grew 14.4 percent, giving it a bigger share of 14.9 percent.

DaimlerChrysler's first-half U.S. sales were down 5 percent, as a 17 percent gain for Mercedes-Benz was more than offset by a 3 percent drop for the bigger-volume Chrysler brand.

Zetsche, in Tokyo for the launch of a new hybrid-electric light truck by truck unit Mitsubishi Fuso Truck and Bus Corp., attributed the sales slide to a common perception among U.S. drivers that American cars consume more gas, and that financial troubles at its cross-town rivals, Ford Motor and General Motors, might be shared at Chrysler.

''There is no doubt that we would have preferred lower incentive levels than we're developing,'' said Zetsche, who had previously been credited with turning around Chrysler's fortunes.

''My take is that the trouble at Ford and GM, which is reported every day, has been perceived by a majority of customers as trouble at all three companies without too much differentiation between the brands. That was to some extent pulling us down.'' Zetsche added that high fuel prices were another factor leading consumers away from U.S. makers, even though he said Japanese cars were no more fuel-efficient than Chrysler's products in the majority of cases.

''Perceptions are facts as far as purchasing considerations are concerned,'' he said, adding it would take time to change that view.

Zetsche said later after a news conference that DaimlerChrysler was still committed to operating profit margins of 7 percent for the Mercedes Group and 5 percent for the Chrysler/Jeep arm in 2007.

TRUCK PROFITS LAG DaimlerChrysler also faces relatively low profit margins in its truck division despite being the world's biggest truck maker.

Andreas Renschler, who heads DaimlerChrysler's Truck Group, said the company was taking several steps to improve profitability, including using more common engines and platforms across its vehicles, expanding in India and other fast-growing markets, and launching new products.

Unlisted Mitsubishi Fuso, a cornerstone of DaimlerChrysler's Asian strategy, on Wednesday unveiled its first diesel-electric hybrid light-duty truck, based on its best-selling Canter model, and said it planned to explore export opportunities, starting with the North American market including Mexico.

It expects at first to sell about 50 units a month in Japan of the hybrid truck, which it said was the most fuel-efficient and lowest-emission light truck in the world.


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