Daimler stock's been flat but rates a `buy'

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The cat is out of the bag.

DaimlerChrysler AG, the world's third-largest vehicle-maker formed in the merger of Daimler-Benz AG and Chrysler Corp., was introduced as a "merger of equals" in 1998. Yeah, right.

Top executives of the merged companies spoke proudly of the potential of the new partnership and how each side would benefit. Few believed them. Chrysler was in a tailspin and Daimler-Benz, the buyer, would run the company.

Cut to 2006. Mustachioed DaimlerChrysler Chairman Dieter Zetsche is all over the airwaves and Internet as the firm's deadpan spokesman. He speaks in a thick German accent of the role German engineering plays in Chrysler vehicles.

Yes, DaimlerChrysler is German and proud of it. If you didn't know better, you'd think you were watching Volkswagen Jetta commercials, which feature an actor playing a wacky engineer with a thick German accent.

DaimlerChrysler's "Dr. Z" is as German as sauerkraut. Former Chrysler Chairman Lee Iacocca was a pitchman for Chrysler who also achieved wide recognition, though not as a funnyman.

Credited with Chrysler's revival, Zetsche was named chairman of DaimlerChrysler about a year ago. In the same way that he cut costs, introduced new products and rejuvenated the Chrysler brand, Zetsche has been trying to turn embattled Mercedes around by improving quality and reworking its product lineup.

No lasting turnaround in its brands will be easy, however.

In the J.D. Power and Associates' 2006 rankings of the dependability of 2003's car and truck models, DaimlerChrysler vehicles did not fare well: Chrysler ranked 13th (232 problems reported per 100 vehicles), Mercedes-Benz ranked 17th (240 problems), Dodge 23rd (258 problems) and Jeep 25th (264 problems).

Lexus topped all comers with only 136 problems per 100 vehicles. No word on whether we're about to be inundated by commercials from wacky Japanese CEOs, but Japan has generally emphasized the U.S. jobs it provides and downplayed its national origins.

At DaimlerChrysler, there's still the problem of sales. In July, DaimlerChrysler sales in the U.S. were down 35 percent from a year earlier.

DaimlerChrysler AG (DCX) stock is flat this year after last year's 21 percent gain. But its balance sheet is stronger than those of its U.S. rivals. Wall Street analysts currently rank DaimlerChrysler shares a "buy," according to Thomson Financial. That consists of three "strong buys," two "holds" and one "underperform."

But the company has its work cut out for it. Even though it often evokes its U.S. hot-rod roots, this is now clearly a German company whose future will be determined on a worldwide stage.

Andrew Leckey writes for Tribune Media Services.

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