Daimler values 19.9% stake in Chrysler down to zero

Both General Motors and Renault-Nissan are reportedly eying an acquisition of Chrysler, or at least some of its shares, but one carmaker that already owns a stake in the Auburn Hills-based firm has downgraded the value of its holding to zero.

Daimler AG, which retained a 19.9% share in Chrysler after its split last year, had previously written down the stake to $219 million at the end of the second quarter. At the end of 2007 the stake was worth $1.17 billion. Daimler CEO Dieter Zetsche has described the move as merely “a function of accounting” but it also serves as a chilling confirmation of Chrysler’s deteriorating fortunes.

According to The Detroit News, Daimler is in negotiations with Chrysler’s current owner, Cerberus Capital Management, to sell the stake. "We are in talks, and that's the only statement we can make," Daimler's finance director Bodo Uebber revealed to reporters at the Germany’s company’s third-quarter earnings call this week.

Cerberus, on the hand, is reportedly keen to offload Chrysler to another carmaker and get out of the deteriorating auto industry.

In the end, Chrysler, along with Jeep and Dodge, could be absorbed by GM and become another one of its subsidiaries. There’s also talk that Chrysler’s assets could be split up and divided among GM and Renault-Nissan.

In a strange turn of events, the uncertainty over the future of Chrysler and its employees has prompted the great-grandson of the carmaker’s founder, Frank Rhodes, to send his own personal ideas on saving the company to Cerberus Capital Management, Chrysler CEO Bob Nardelli, Chrysler co-President Jim Press, and several media outlets.

In his letter, Rhodes gave three different suggestions. They include telling the American public that Chrysler is here to stay, expanding its product sale deals beyond building a truck for Nissan and a minivan for Volkswagen, and developing an inexpensive car with low features and low maintenance.

The letter ends with the statement, "this is a sad period for American history, one of which should be and will be won. I am on your side. Make it work - failure is not an option."