Chrysler Group President Dieter Zetsche Says North American Automotive Industry is Reinventing Itself to Stay Competitive in 21st Century

* North American auto industry is evolving, not faltering * Strong business processes, cost reduction and large-scale product offensive will keep Chrysler Group on top * Cites Illinois' stake in the auto industry

CHICAGO, May 25 -- Dieter Zetsche, President and Chief Executive Officer of the Chrysler Group, today proclaimed that, contrary to popular opinion, the domestic automotive industry is not only surviving, but thriving. In a speech to members of the Chicago Executives' Club, he stressed that the North American auto industry is evolving and reinventing itself to meet the demands of global competition, and the Chrysler Group is well prepared to meet the demands of the transforming industry.

Responding to recent media attention that global competition is taking a toll on the domestic auto industry, Zetsche said, "I do not belong to the school of thought that the North American-based auto industry is teetering on the brink of Armageddon."

He added, "In reality, the form of the 'traditional' Detroit automakers, as well as that of automakers the world over, has long been evolving and continues to do so."

Zetsche cited industry trends like shifting brand ownership (including the merger of the former Daimler-Benz and Chrysler Corporation into DaimlerChrysler) and more competent competitors that give customers more vehicle choices as just some of the reasons the North American auto industry is reinventing itself to compete.

Zetsche also emphasized Chicago's and Illinois' stake in the success of the auto industry. "The economic ties that bind the Chrysler Group, Chicago and Illinois are strong. We directly employ 2,700 people in our Belvidere plants (assembly and satellite stamping) that contribute about $260 million to the local economy in taxes, salaries and benefits. Chicago is also home to about one-half of our 216 Illinois dealerships that provide 7,000 jobs across the state and $260 million in sales tax every year."

He outlined the Chrysler Group's strategy for survival in today's business climate -- to be more competitive on price and to differentiate on product. "We undertook strong initiatives aimed at making the Chrysler Group more productive and efficient throughout our plants and operations -- raising quality, reducing costs, and most importantly, improving our products," he said.

A 2003 Harbour study reveals that every Chrysler Group plant improved in year-over-year ratings, with an 8.3 percent improvement for the Chrysler Group as a whole. This is the best annual improvement ever measured for Chrysler and the second best improvement of any manufacturer in history.

Additionally, the Chrysler Group has sustained a double-digit rate of improvement in quality on J.D. Power ratings. In fact, the Chrysler Group has achieved 14 years of consecutive year-over-year improvement in the J.D. Power Initial Quality Study. That reflects a growing trend of improved quality across the automotive industry, where the top nine of 14 manufacturers are separated by less than three-tenths of a defect per vehicle.

"No matter how good you are in this business at quality, process, cost management and all of the fundamentals -- doing them well just punches your ticket of entry," Zetsche said.

Improvements in product quality and business processes set the foundation for the Chrysler Group's exciting new products.

Zetsche believes that winning in the auto industry always comes down to offering great products. The Chrysler Group, he said, has launched the biggest product offensive in the company's 80-year history, attacking virtually every segment of the market.

By the end of 2004, the Chrysler Group will have launched nine all-new products and will refresh four major products. Once fully launched, Zetsche said those vehicles will account for 60 percent of the Chrysler Group's annual volume.

The Chrysler Group's assault on the market will not be limited to U.S. models. "By 2007, we will double the number of right-hand drive and diesel- powered models we'll offer in international markets," he added.

Zetsche concluded with a forecast that global competition in North America is just heating up. "Where some choose to make dire predictions for prospects of North American-based companies in the global auto industry, I for one see some challenging but exciting times ahead."