Captain Kirk, Please Report To The Bridge

Forbes
Jerry Flint, 02.23.07, 2:45 PM ET

As I read these stories about Chrysler, I cannot help thinking of Mark Twain's famous cable to the Associated Press 110 years ago: "The reports of my death are great exaggerated."

Yes, things look bad for Chrysler.

The Germans on the ruling Supervisory Board at DaimlerChrysler (nyse: DCX - news - people ) seem determined to get rid of the U.S. company, the bankers are eyeing the fees and all the momentum points to a sale. The old saying applies here; once these things get started, they tend to have a life of their own.

If the crew in Europe sells Chrysler, the chances are strong that whoever buys the company will dismember it. The jewels at Chrysler are the Jeep and minivan business and, to a lesser extent, some of the Dodge trucks. That is the part of the business worth owning, or trying to resell at a premium. It is not hard to see new owners closing down all or most of Chrysler's passenger car operations. This could be the end of the business started by Walter P. Chrysler during the Roaring Twenties.

The sad thing is that Chrysler really is not in horrendous shape. OK, a $1.5 billion loss sounds scary, unless you remember the $12 billion loss of Ford last year and the $10 billion loss at GM the year before. The auto industry is a cyclical business. I figure that DaimlerChrysler lost at least $5 billion on its silly little Smart car, and it has yet to bail out of that boondoggle. Remember, too, that as recently as 2005, the Chrysler group reported an operating income of $1.8 billion, excluding the profits of the financing arm, which came largely from American Chrysler.

On a relative basis, Chrysler is not doing that badly. Through Feb. 12, Chrysler group production was 298,714 cars and trucks, which was up 4% from 287,319 the year before. Heck, Honda (nyse: HMC - news - people ) production here is up only 2%, Toyota (nyse: TM - news - people ) production here is up 2% and Nissan (nasdaq: NSANY - news - people ) is down 9%. What about Chrysler's Detroit rivals? Ford Motor (nyse: F - news - people ) is down 17% and General Motors (nyse: GM - news - people ) is down 16%. Chrysler's 4% increase looks darn good by comparison.

Chrysler's sales in the first month of the year (February figures will not come out until early in March) were a nudge ahead of the year before. Excluding Mercedes vehicles, Chrysler posted sales of 156,308 units versus 155,465 the year before. That is better than GM and Ford. Chrysler group's market share was 14.3%, up from 13.6% a year ago.

A few caveats are in order: Chrysler's production is up more sharply than its sales because the company has several new models and it is building dealers' stocks on that new stuff. It is these newer vehicles that are helping to pump up the sales figures. Sales are down on some important oldies like those Chrysler 300 and Dodge Charger sedans and the Jeep Grand Cherokee and Liberty sport utility vehicles. Let us not forget that Chrysler is giving up too much money in sales incentives in order to entice buyers.

Still, up is better than down. In this market, how much would GM and Ford give to see sales this year running one half of one percent ahead of last year? Not only is Chrysler right in the midst of launching some new models, such as the Chrysler Sebring convertible and the Dodge Avenger sedan, but the company has finally worked off its bloated inventories from last fall. This means that the dealers may be more receptive to taking on greater numbers of the new vehicles.

A redone minivan is on its way, too, and with Ford and General Motors giving up on this market segment, Chrysler could make some gains in this segment. A new sport coupe, the Dodge Challenger, is also on the horizon. It will not be a big seller, but it will get on the car magazine covers--if Chrysler lives to build it, of course.

Even Chrysler's recent cutback announcements--13,000 employees over a couple of years--are relatively mild. The company plans to shutter just one assembly plant and to eliminate a few factory shifts. The other strategy in Chrysler's latest recovery plan is to cut costs by reducing the number of vehicle platforms while still rolling out a slew of new models in the coming years. In this business, new product is the key to success.

If you wanted to, you could make a case that Chrysler already is in a recovery mode. Of course, that is what happened years ago when French Renault (other-otc: RNSDF - news - people ), under pressure from its left-leaning, anti-American unions, sold American Motors just as AMC was turning around.

Chrysler, the buyer of American Motors, did well with Jeep but gave up on AMC cars. Chrysler could suffer a similar fate in a sale, despite all the facts in its favor.

One more advantage of Chrysler over GM and Ford: It has fewer divisions and more focus.

GM still has many nameplates and dealer organizations to support. Ford domestically only has Ford, Lincoln and Mercury, which is akin to Chrysler's three U.S. brands. Ford also has to deal with Volvo, Jaguar, Land Rover and, to date anyway, Aston Martin. Plus, Ford owns a big chunk of Mazda. Right now, Chrysler's North American market share is not that different from Ford's.

Of Chrysler's three brands, both Jeep and Dodge have distinct images and positions in the market. But all this wouldn't save the company from dismemberment.

Will it happen? If the buyer is not one of the auto companies, there are still plenty of scavengers and vultures looking to make some money by breaking up the company. Right now, General Motors may be the only car company seriously looking at possible deal with Chrysler.

Chrysler has faced more than one crisis in its history, and something always comes along to save the company.

Ah, where is Captain Kirk, meaning Kirk Kerkorian, when we need him?