The ratings on Germany-based DaimlerChrysler AG reflect the company's position as a leading producer of passenger cars and commercial vehicles, and its moderate financial policy. The ratings also reflect the severe challenges the company faces to bolster the competitiveness of the Chrysler Group, its U.S. operations, in light of the adverse secular trends affecting the North American automotive industry. DaimlerChrysler has a particularly strong global competitive position in luxury passenger cars, which it sells under the Mercedes-Benz brand. Although relatively recession-resistant compared with mass-market vehicles, luxury vehicles are nonetheless still affected by the business cycle. The recent softening in demand for luxury vehicles resulted in a decline in unit sales of the Mercedes Car Group by 3% in the second
