For Chrysler, Dr. Z's Startling Prescription

Remember those Chrysler commercials, where the mustachioed Dr. Z, with thick German accent, raved that Chrysler's cars have "the best of American and German engineering and design"? Apparently even the doctor couldn't make this transplant work. Last week Dr. Z--a.k.a. DaimlerChrysler chairman Dieter Zetsche--stunned Detroit by putting Chrysler on the block. "All options are on the table," he said, as the German automaker considers what to do with its American problem child. Just last fall, Zetsche insisted Chrysler wasn't going anywhere. But Zetsche said he "revisited" the issue after Chrysler lost $1.5 billion last year as $3 gas drove its SUV sales into the ditch. Now, while Chrysler chief Tom LaSorda attempts a repair job by cutting 13,000 workers and engineering more fuel-efficient models, DaimlerChrysler has hired JPMorgan to shop for suitors. Late last week reports emerged that GM is in talks to buy Chrysler; both companies declined to comment. Other possible buyers: Nissan-Renault, which is looking for an American partner, and the Chinese, who are eager to crack the U.S. car market.

Despite the cross-cultural benefits Dr. Z ballyhooed, Zetsche said last week that Mercedes won't share the mechanical underpinnings of its models with its down-market sibling. That's a cost-savings strategy Toyota uses with Lexus, which rides on a common Camry chassis, but is still America's No. 1 luxury line. With Mercedes making record profits, Zetsche couldn't push the German side of the company to offer up more of its engineering (and prestige). "It doesn't seem like the DaimlerChrysler merger has lived up to its promise," says Edmunds.com auto analyst Jeremy Anwyl. After nine years, Dr. Z seems to have decided that the best treatment might be to amputate.