Daimler-Chrysler Waiting for Mercedes

Being a car enthusiast, I have thoroughly enjoyed the fun driving experience of my Chrysler PT Cruiser. I bought the car shortly after the company became Daimler-Chrysler (NYSE: DCX  ) and the quality of customer service has been nothing short of sliding under the covers on a cold night.

With automakers fighting for each customer like each sale will be their last, incentives have lifted revenues but effectively squeezed profit margins. Ford (NYSE: F  ) and GeneralMotors (NYSE: GM  ) have seen sales spike but have struggled to manifest a similar acceleration in profit. Daimler-Chrysler, however, reported a 7% gain in third-quarter operating profit today on only 2% revenue growth. It appears that the company's results are stronger without the negative impact of struggling Japanese partner Mitsubishi Motors.

The company's sales were impacted by a 4% decline from the year-ago quarter in Mercedes sales, which were much weaker in Europe (-13%) but actually stronger in the U.S. (+12%). The Chrysler group produced a 3% increase in sales, bolstered by success from new products such as the Chrysler 300 and 300C, Dodge Magnum, Dodge Grand Caravan, and Chrysler Town and Country. Additionally, Daimler-Chrysler's Commercial Vehicles division grew sales 36% on a 56% increase in unit sales, and its Financial Services division produced a 10% increase in contract volume.

While it appears that Mercedes is struggling a bit right now, a little history lesson would show us that it wasn't so long ago that the premium car maker was leading the way. Daimler-Chrysler has been vigorously promoting the launch of several new Mercedes models that it believes will bear fruit in the next few quarters. Check out the new C- and A-Class models, as well as the SLK-Roadster Convertible, and you'll see (at least if you're a car buff) why the company is optimistic.

Although Daimler-Chrysler makes quality vehicles with strong brand names and has invested $100 million in Sirius Satellite Radio (Nasdaq: SIRI  ) , it still acknowledged the tough climate in a recent press release: "For the automobile business, demand in the fourth quarter seems likely to weaken." Although the company does anticipate spotty growth in certain segments, without a significant driver providing some much-needed momentum, I would avoid the shares until Mercedes regains its stride.

Turn the wheel and drive into these other takes:

• Sirius, XM Facing Down the Giants
• GM Faces Its Demons
• Ford: Clever Bank, Bad Car Co.

Fool contributor Phil Wohl spent more than 12 years on Wall Street and loves driving his PT Cruiser. He does not own shares of any of the companies mentioned.