DaimlerChrysler Thinks Small

Chris Noon | AUBURN HILLS MI - - The company has explained that its Chrysler segment is facing a tough market environment in the U.S. with excess inventory, non-competitive legacy costs for employees and retirees, continuing high fuel prices and a shift in demand toward smaller vehicles. In the second half of the year, Chrysler will introduce a total of eight new vehicles, of which many are diminutive. This includes the smallest Dodge SUV in history--the Dodge Nitro--as well as a new version of the Jeep Wrangler.

You get the picture. It's hardly a time to be thinking about buying mighty Swedish truck makers. DaimlerChrysler (nyse: DCX - news - people ) said Tuesday it viewed the competitive threat posed by the potential takeover by German heavy good vehicles maker MAN (other-otc: MAGOF.PK - news - people )of Stockholm-listed Scania (other-otc: SVKBF.PK - news - people )"from a relaxed perspective," and has no interest in bidding for the Swedish company.

Commenting on the possible loss of some of the truck market should MAN's bid for Scania succeed, DaimlerChrysler's head of commercial vehicles, Andreas Renschler, told the Frankfurter Allgemeine Zeitung that the company "is already set up so well that we can attain the desired economies of scale with our current brands and products".

Renschler told Financial Times Deutschland that, in the longer term, the company plans to run the marketing divisions of its commercial vehicles and car units as separate business.

Meanwhile, DaimlerChrysler's other top brass have been busy. Chairman Dieter Zetsche bit the bullet Tuesday and said that Chrysler Group would cut deliveries to dealers by 90,000 vehicles, or nearly 24% for in the third quarter, as falling sales of trucks and SUVs have left it with bloated inventories. The troubled company has also scaled back production for the rest of the year.

The Boersen-Zeitung newspaper also reported Chief Financial Officer Bodo Uebber as saying talks in the U.S. with the UAW union on reducing health care benefits for Chrysler's workers have been mothballed until next year. Uebber also affirmed DaimlerChrysler plans to remain a significant shareholder in European aerospace giant EADS, though it will look in the longer term to cut its stake to 15% from the current 22.5%.