Monday, Feb. 2, 2004 | 10:58 a.m.
SUN STAFF AND WIRE REPORTS
DaimlerChrysler AG's Chrysler unit will survive even if it doesn't increase profit in 2004, Dieter Zetsche, chief executive of the unit, said in reaction to a Barron's article that this will be a "make-or-break" year for the automaker.
Chrysler has accumulated $4.4 billion of losses since Zetsche announced in 2001 a three-year plan to return to profit. Zetsche has said the unit may have had a "slight" profit last year, short of a $2 billion goal.
"There is no make or break year," Zetsche told reporters following a speech Saturday at a national convention of car dealers in Las Vegas. "If we do somewhat better on the bottom line, we'll all be very happy. We're working very hard to accomplish that. If we do a little worse, this will be a disappointment, but not a break."
Three years of cost cutting, quality improvements and product development "comes to fruition" this year, Zetsche said. Chrysler is introducing nine new models this year in the United States that will represent 60 percent of its volume as it seeks to increase sales, he said.
The Feb. 2 Barron's article reported that investors also are worried that Chrysler is pulling cash for product development away from DaimlerChrysler's Mercedes-Benz brand.
"The facts clearly make that a not-very-smart statement," Zetsche said. "We finance all of our long-range product spending and all of our spending altogether out of our own cash flow," he said, referring to the Chrysler unit.
Separately, U.S. safety official Mark Rosenker told dealers that technology used in the aviation industry could reduce the death toll on American highways. The number of deaths now stands at more than 40,000 annually.
Several technology advancements used on commercial aircraft such as electronic stability control devices -- gadgets that keep vehicles from losing control and rolling over -- are now being installed on most European and some high-end American automobiles to reduce the risk of injury and death from crashes.
Rosenker said all vehicles should have such equipment.
"There is tremendous capability for accident prevention," said Rosenker, vice chairman of the National Transportation Safety Board. The board is an independent federal agency that makes safety recommendations but is not an enforcement agency.
Rosenker was one of several speakers Friday at the J.D. Power and Associates International Automotive Roundtable in Las Vegas.
Other safety devices that Rosenker said could reduce automobile crashes include collision avoidance devices, which detect surrounding vehicles and alert drivers when nearby vehicles are too close.
"Safety ought to be built into automobiles and safety ought to be affordable for everyone," he said.
Rosenker also urged auto manufacturers and mobile-telephone makers to work together to make hands-free telephone use easy and safe for the nation's 150 million mobile telephone users, many of whom talk on the phone and drive.
And automobile executives at the roundtable Friday talked about the future of the industry and how their companies are trying to compete.
Jim Press, executive vice president and chief operating officer for Toyota Motor Sales USA Inc., said the differences between cars are becoming narrower and narrower, meaning auto manufacturers have to add value and reduce costs to keep customers.
He said the auto industry has almost unlimited opportunities in the next two decades because of population growth. Each baby represents about 20 future purchasing cycles, Press said.
Gary Cowger, president of General Motors North America, said incentives would remain in the auto market for the foreseeable future. Incentives may keep automobile manufacturers competitive, but rising health care costs are negating that ability, he said.
Cowger said health costs make it hard for American auto manufacturers to compete globally with other manufacturers based in countries where health benefits are offset by government financing.
The escalating cost of health care is hurting the auto industry because health coverage now costs automakers far more than steel, Cowger said.
He challenged the public and private sectors to come together to find a solution to rising health care costs.
Sun reporter Michelle Swafford
and Bloomberg News contributed to this report.
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