DaimlerChrysler Ends Week with Busy Day

New York - Getting slammed by a judge, ordering massive layoffs, announcing an embarrassing recall and planning two new ventures. Forget soap operas, ER or NYPD Blue. The dramas unfolding at DaimlerChrysler last Friday don t hold a candle to any of them. The troubled automaker was wheeling and dealing around the world and got kicked in the pants a few times. Here's a rundown on their busy, busy day.

DaimlerChrysler's public image took a severe blow as documents were made public by a North Carolina court that reveal the company's program to buy back and resell vehicles with a troubled history, a process known as "lemon laundering." The documents reveal that Chrysler paid $1.3 billion to buy back more than 50,000 vehicles from 1993 through 2000.

"From a review of these documents we conclude that this misconduct by DaimlerChrysler is merely a part of its business plan," according to Doug Abrams, an attorney suing Chrysler on behalf of a North Carolina couple who unknowingly bought a recycled "lemon". The three-inch stack of DaimlerChrysler documents came to light because they were in a notebook referred to by a Chrysler lawyer while appearing as a witness in the case. The judge ordered the lawyer to turn over the documents, setting off a two-day scramble by Chrysler to get the documents sealed, to no avail.

The documents reveal that DaimlerChrysler generally recovers close to 70 percent of the buyback price by auctioning most of the troubled vehicles to DaimlerChrysler dealers who resell them to the public. Among documents that accompany these vehicles are disclosure forms that are supposed to be signed by new owners to acknowledge they are aware of the vehicle's troubled history. The forms are frequently not signed.

The case, filed in 1999, has been marked by DaimlerChrysler's repeated refusal to produce documents as the court has ordered. Since December 11, 2000, the company has accumulated more than $325,000 in court-ordered sanctions.

Over the next three years, the North American arm of DaimlerChrysler plans to eliminate nearly 26,000 jobs, most of them hourly workers. Some 2,700 white-collar Chrysler Group employees, expected to be laid off by March 30, saw those dismissals happen on Friday. Engineers and managers at the company's Huntsville, plant also felt the sting on Friday as they too were handed their pink slips and told to pack it in. Officials from neither the company nor the union would confirm the number of jobs lost in Alabama, but staffers said they were told to expect their ranks would be trimmed by 20 percent, in spite of having sixty percent of eligible workers take an early retirement offer.

Company officials said the cuts were part of a $3.9 billion revival plan to get the company out of the red.

DaimlerChrysler AG's Chrysler arm is recalling 615 Dodge Viper sports cars to fix problems with five-point seat belts for racing use.

No injuries or accidents have been reported involving the seat belts installed as options in the questioned Viper ACR and GT-2 Commemorative Editions from model years 1999 to 2001, the automaker said, but the recalled racing harnesses do not meet international standards for racing safety in the $70,000 cars.

The recall does not affect the three-point seat belt system standard in all Vipers, including ACR and GT-2 models. Chrysler said affected owners should not race the cars until the harnesses are replaced, until which time the standard seat belt system should be used for all driving.

Chrysler said affected Viper owners will be notified by mail.

In lighter news, Mitsubishi Motors Corp and DaimlerChrysler AG will step up their marketing cooperation in Japan and Europe. A source at DaimlerChrysler, which owns a 34 percent stake in the Japanese automaker, said the German company would take charge of new car transport and parts management for both firms in Europe. The two will also integrate dealerships gradually throughout Europe.

In Japan, Mitsubishi will sell the Mercedes-Benz line of small commercial vehicles at its nationwide affiliated outlets and handle pre-delivery checks and maintenance for it's partner firm.

Mitsubishi began selling DaimlerChrysler's Smart miniature car in December and plans to launch the T1N and Vito commercial vans this year. The two companies aim to jointly develop and produce their Z car, a subcompact with a 1.1- to 1.5-litre engine, and to share the platforms of compact cars.

Finally, a source at Hyundai Motor Co. says the German automaker is negotiating with them to jointly build a commercial vehicle factory in Chonju, North Cholla Province, Korea. The two sides hope to reach an agreement on the joint venture in April or May.