Schrempp favors margins over sales

WASHINGTON - DaimlerChrysler CEO Juergen Schrempp is worried more about declining margins on cars and trucks than about declining sales next year.

One remedy for slim profit margins is to get rid of costly incentives such as 0 percent financing, he said.

"If I were the only manufacturer in the United States, I wouldn't have even started it," he said. "The market in December will be dropping dramatically because we have pulled forward the volume.

"I know very well how difficult it is to get out of it," he added, but "we have to get to a situation (in which) we have healthy margins in the auto industry."

As for the possible need for further restructuring at the troubled Chrysler group if vehicle sales plunge next year, Schrempp skirted the question this way:

"Do I want 14 million at high margins, or do I need 15 million at low margins? So the question (really) is what quality of market do we have, not only what volumes do you have?"

Schrempp also said he met with U.S. Treasury Secretary Paul O'Neill while visiting Washington last week and found O'Neill more optimistic than he is about the automotive market.

"I hope that the secretary is right," he said, joking that he would call Chrysler CEO Dieter Zetsche and have him revise the North American business plan.

Zetsche is struggling to turn the Chrysler group around as incentives mount and many analysts predict sales will drop significantly next year. The remarks came in response to reporters' questions after a Schrempp speech to the U.S. Chamber of Commerce.

In his speech, Schrempp said corporations and governments need to do a better job of sharing the benefits of globalization with developing countries. He called for a new Marshall Plan for such countries and encouraged corporate leaders to play a bigger role in promoting prosperity, social progress and democracy around the world.

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