Possible dumping of American executive seen as German power move at Chrysler Corp.

<br>STUTTGART, Germany (AP) _ DaimlerChrysler shares rose Tuesday on reports that the automaker is preparing to oust the American head of its unprofitable U.S. operations and replace him with a German.

Tuesday, November 14th 2000, 12:00 am

By: News On 6

STUTTGART, Germany (AP) _ DaimlerChrysler shares rose Tuesday on reports that the automaker is preparing to oust the American head of its unprofitable U.S. operations and replace him with a German.

Some analysts applauded the reported move and said it would bring Chrysler under tighter reins.

James P. Holden, president of DaimlerChrysler Corp., is expected to step down this week and be replaced by Dieter Zetsche from DaimlerChrysler AG's commercial vehicles unit, The Detroit News reported on Tuesday, citing unnamed sources.

The Wall Street Journal reported that the Stuttgart-based automaker planned a special supervisory board meeting Friday where it was expected it would let Holden go after a year at the helm of Chrysler.

DaimlerChrysler spokesman Thomas Froehlich refused to comment on the reports, calling them speculation, but he confirmed that the company has called a supervisory board meeting Friday at its German headquarters.

The reports boosted DaimlerChrylser shares, which were up 2.19 percent to 55.18 euros ($47.45) in midafternoon Frankfurt trading.

Holden is clearly under pressure to stem the division's losses. DaimlerChrysler's U.S.-based unit lost $512 million in the third quarter, its first operating loss in nine years, and the company's stock price is near its 52-week low of 49.60 euros.

``If this happens (Holden is replaced), it's at least going to be positive for the stock in the short term,'' said Juergen Pieper, an auto analyst with Metzler Bank in Frankfurt. ``But in terms of the company's performance it will still take a few quarters to show results.

``What is surprising is how it happened so fast,'' Pieper added. ``Things deteriorated so quickly at least at this point it's better to take tighter control. That's very understandable from a German point of view.''

Sales of Chrysler, Dodge and Jeep vehicles have been erratic in recent months, with several models posting large declines. In October, the company idled seven factories in the United States and Canada for a week to cut inventories of cars and trucks.

Then, Holden was assailed by DaimlerChrysler AG chief Juergen Schrempp at an Oct. 30 board meeting for failing to tell him in advance about the plant shutdowns, the German magazine Der Spiegel reported this week.

Georg Stuerzer, an auto analyst with Bayerische Hypo-Vereinsbank in Munich, said Schrempp has become increasingly frustrated with Holden for giving unrealistically rosy reports about the situation at Chrysler.

``Mr. Zetsche is, let's just say it this way, a very close friend of Mr. Schrempp's, and Mr. Schrempp can be more assured of getting reliable information from him,'' Stuerzer said.

``On the one hand, you get the feeling there's a lot more wrong with this company than the public knows,'' Stuerzer said. ``But on the other hand, if you have stronger control over the Chrysler arm, that could be a positive development.''

Last month, Holden said the company's problems stemmed from a convergence of events in an industry where sales and incentives are both at all-time highs. He said Chrysler used to depend on a 3 percent annual price increase to help revenues, but that the automaker hasn't been able to raise prices in the U.S. market for a few years.

Pieper said Holden should have been more aggressive about cutting costs and rushing new models to market, but was unwilling to put all the blame on Holden's shoulders.

``He hasn't been in the current position for a long time, so it cannot be his fault alone,'' Pieper said. ``But as a boss you can't just do everything correctly, you have to have good timing with the market, and that's certainly not what he had.''