Leading position in the relatively recession-resistant luxury-vehicle industry, despite the need to address quality issues at Mercedes Car Group; Cyclical upturn of the global commercial-vehicle industry supports growing profitability of DaimlerChrysler's commercial vehicle division; Broad product and geographic diversity in the automotive industry; Moderate financial leverage; and Above-average financial flexibility. Challenge to turn around weakly-performing Mercedes Car Group, which is suffering from quality issues and slow sales of the smart brand vehicles; Uncertainty whether the current restructuring of the smart brand within Mercedes Car Group will be able to neutralize this brand from a profitability perspective by 2007; and Burdensome unfunded pension and retiree medical liabilities. The ratings on DaimlerChrysler AG reflect the broad product and geographic scope of its
