Chrysler's Eberhardt out; more moves likely: Bernhard in?

[PHYBENZ]

Chrysler Group's embattled sales chief Joe Eberhardt stepped down Tuesday as the automaker moved to defuse tensions with its dealers and prepare a new restructuring to reverse deep losses.
In recent months, as demand for Chrysler vehicles slumped, Eberhardt, 43, became a lightning rod for dealers' complaints about his brusque style and increased pressure to order more cars and trucks than they could sell.
"Do I think this will help?" said Southfield dealer Dan Frost, referring to Eberhardt's departure. "Yes. His removal shows that upper management understands what the middle management and dealer body are looking for from the corporation."
But several dealers said Chrysler needs to tackle the underlying cause of the problem, which is that it builds too many vehicles.
Even as the Auburn Hills automaker badgered dealers to take up more vehicles, its U.S. sales fell 8 percent in the first 11 months of 2006, putting Chrysler in fourth place in the U.S. market after Toyota Motor Corp.
In the third quarter, Chrysler lost $1.5 billion, prompting renewed calls from DaimlerChrysler's German investors for a sale or spinoff of the U.S. division acquired in 1998.
DaimlerChrysler officials in Germany said no options have been ruled out.
Chrysler CEO Tom LaSorda is under intense pressure to produce a plan by the end of the year to restore the U.S. automaker's profitability. His own future is on the line, as he and his team try to pare costs by $1,000 per vehicle.
A Bernhard comeback?
The climate of uncertainty in Auburn Hills has fueled rumors that DaimlerChrysler CEO Dieter Zetsche might bring back Wolfgang Bernhard, his former No. 2 at Chrysler.
Bernhard now heads Volkswagen AG's VW division, but German media speculate he is unhappy there following the recent departure of CEO Bernd Pischetsrieder.
A source at DaimlerChrysler said no discussions had taken place between Zetsche and Bernhard, but some company officials say the subject is likely to come up between the two executives, who remain on good terms.
"We always stayed in contact," Zetsche said last month in Beijing. If Bernhard were to leave VW, "first he'd have to collect his thoughts before making any plans," Zetsche said. He declined to say any more.
Zetsche and Bernhard restructured Chrysler together earlier in the decade, but industry analysts and dealers say their plan did not reduce the company's U.S. production capacity sufficiently.
Chrysler did not close any U.S. vehicle assembly plants, whereas General Motors Corp. and Ford Motor Co. are making big cuts in their North American capacity as part of their restructuring plans.
"Joe might have been blamed for some things that weren't his fault," said Frost, president of Southfield Chrysler. "But he wasn't the best man in terms of bringing people into the corral. Joe needs to work on his people skills a bit."
Martin "Hoot" McInerney, a large Metro Detroit-area dealer, said Eberhardt was a poor fit for the job, and said it was essential for Chrysler to find a strong leader and salesperson to replace him. "The right person can make a huge difference in that position."
Some dealers and sales managers at Chrysler regret the departure of Gary Dilts, a senior vice president of sales who reported to Eberhardt.
Raymond Fisher, former vice president of sales, service and parts, also left this year as Chrysler's sales performance weakened.
Chrysler sells mostly pickups, SUVs and minivans, and the recent gas price volatility undercut demand for such vehicles. Chrysler also struggled in model introductions earlier this year, but has now launched most of the 10 new vehicles coming out in '06.
At the Los Angeles auto show last week, Eberhardt said many factors, including rising interest rates, led to a sudden slump in demand. "We could not have responded quickly enough," he said. "A lot of these things have been out of our control."
Some dealers said Eberhardt reached out more to them in recent weeks as the extent of their frustration became evident.
The Detroit News reported Saturday that Chrysler was offering cash bonuses to dealers of up to $7,000 per vehicle to help them clear out stocks of 2006 models.
One dealer who spoke on condition of anonymity described the program as "a good move, too late."
Eberhardt: Back to retail
Company sources say Eberhardt's responsibilities will be shared among several executives, namely Steven Landry, vice president of sales and field operations, and Mike Manley, vice president of sales strategy and dealer operations. They will report to LaSorda.
Eberhardt was offered another position in the DaimlerChrysler group, the sources said, but he chose instead to go to work at an independent Mercedes-Benz dealership in the United States.
"Joe's deep understanding of the automotive industry and his proven leadership will continue to serve the company well as he moves back to the retail side," Zetsche, who also heads Mercedes, said in a statement.
Eberhardt, who was born in Stuttgart, Germany, rose through the Mercedes ranks. In the early 1990s, he served as general manager of Mercedes-Benz Manhattan, a company-owned dealership, but went back into the corporation in 1995.
As head of DaimlerChrysler's operations in Britain from 1999 to 2003, he boosted sales and dealer profits in a tough market.
"Joe brought a much-needed discipline to our sales, marketing and service organizations when he arrived in the summer of 2003," LaSorda said in the statement. "Being back in the retail world is something he has talked about for some time now, and having a proven track record in that arena makes it a natural."

(detnews.com)

[Ultimate Car Guy]

Sad. And to think that Eberhardt was a strong candidate as CEO of Chrysler when Dr. Zetsche was promoted.