The reason they are closing dealerships and cutting back is because the acquisition of Chrysler by Daimler in 1998 has become a financial burden to Daimler.
"Chrysler earned the highest profit per vehicle among Detroit's Big Three auto makers in the mid-1990s, but its fortunes have plummeted in recent months. Chrysler reported a $512 million loss for last year's third quarter, its first quarterly loss in nine years, and DaimlerChrysler has indicated that Chrysler will post a fourth-quarter loss of $1.2 billion when the company announces 2000 results next month. DaimlerChrysler expects Chrysler to continue to post losses in the billions of dollars well into next year."
The company ended the fourth quarter with no cash reserves to protect them,(down from 6 billion euros in the 3rd quarter), forcing them to borrow 7.1 billion dollars. The CEO of Daimler Chrysler, Juergen Schrempp, vows to restore Chrysler to it's former glory as an American icon, but he is being pressured to do it within 6 months, which is most likely impossible. Many people would like to see the two names parted once again.
The Good News is that Daimler is doing great!