DaimlerChrysler confirms Chrysler talks

Chrysler has struggled as American buyers have flocked to more fuel-efficient vehicles.

“The crucial factor was the unforeseeable shift in demand to smaller, more fuel-efficient vehicles which was triggered by increased gas prices in the U.S.,” Zetsche said.

The final straw for the marriage may have been the U.S. unit’s operating loss last year of $1.5 billion.

In a first tacit admission that a sale was being explored, Zetsche said in February that all options regarding the unit were on the table.

Since then, at least three groups reportedly have expressed interest in Auburn Hills, Michigan-based Chrysler, including Canadian auto-parts supplier Magna International Inc., which has reportedly submitted a bid to buy the business for as much as $4.7 billion.

Cerberus Capital Management LLC and a consortium of investors led by Blackstone Group each have reviewed Chrysler’s finances and are expected to make bids.

The Detroit News, citing people close to the talks, reported on its Web site that all three had submitted formal bids to DaimlerChrysler, with a decision to be made on the bids by the end of April. The automaker did not comment on the report.

No matter when Chrysler is sold, Daimler is unlikely to make back what it paid. Analysts have valued the unit at between nothing and $13.7 billion.

Members of the Canadian Auto Workers, the United Auto Workers of the U.S. and German unions met Tuesday night for more than three hours to plan their strategies. They reiterated that Chrysler should not be sold — and that if it is, any deal should not lead to major job cuts.

The unions will play a vital role in any deal because their representatives account for half of the seats on DaimlerChrysler’s supervisory board, the U.S. equivalent of a board of directors.

In other business, the board elected Manfred Bischoff as its new chairman to replace Hilmar Kopper, who held the same position for 17 years.

Kopper stepped down from the board, and shareholders selected Clemens Borsig, the chairman of Deutsche Bank AG’s supervisory board, to replace him.

Shareholders also approved a 2006 dividend of 2 euros ($2.67) a share that will be paid April 5.

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