Tuesday, Daimler AG (NYSE: DAI) reported that it returned to profitability in the third quarter of 2009, and Honda Motor Co. Ltd. (NYSE: HMC) posted much lower fiscal second quarter earnings, but which were better than the loss the company had earlier expected.

In line with previously released preliminary results, Daimler posted a net profit of 56 million euros ($83.2 million), or 0.04 euros per share, down from 213 million euros ($316.5 million) in the same quarter of 2008. And it said revenue fell to 19.3 billion euros ($28.7 billion) from 24.5 billion ($36.4 billion) a year ago. The slump in sales was most substantial in its Daimler Trucks and Mercedes-Benz Vans units.

Even with the cash-for-clunkers program in full effect, demand for new automobiles is the lowest it's been in years. This has heightened competition among automakers, who are being forced to both improve their products and discount their prices. Consumers in the market for a new 2010 vehicle may be treated to a discount.

Toyota Motor (NYSE: TM), for example, plans to introduce a less expensive Prius, and the 2010 Nissan (OTC: NSANY) Sentra will see its sticker price drop by anywhere from $130 to $1,080, based on the features the buyer opts for. Other vehicles that will hit the showroom floors at a discount include the Mercedes-Benz E350 mid sized sedan and the Lexus RX 350, discounted by $3,300 and $700, respectively.

With recession fears, housing market worries and high gasoline prices, retailers have been facing tough times and so have luxury car dealers. March proved another tough month for carmakers, with overall U.S. sales declining after the weakening economy put a curb on consumer spending.

Amid the challenging market conditions, even the rich are joining the general anxiety. With the dollar losing ground each day it is difficult to know how much your savings are valued at any more. Then, a simple question appears "Can I afford to buy a luxury car?" It seems like not too many gave a positive answer as most luxury car brands faced sales declines last month.

Sales for BMW fell 8.7%, while Lexus saw a plunge in sales of 13.6%. And even Mercedes-Benz was down nearly 4 percent. Overall luxury vehicle sales fell almost 13% compared with the same month last year, according to Autodata.

Earlier this month I was in London visiting with several professional portfolio managers that I worked with these past 16 years. All in all, I visited with 11 professional managers who, combined, manage over $80 billion in the U.S. stock market. It's always an interesting perspective to hear the views and observations of foreigners who make their living in our markets. They do indeed bring a refreshing, nonbiased point of view.

One portfolio manager in particular was vehement that Daimler (NYSE:DCX) will not rise in value until they unload "that turkey," the Chrysler division. He explained that Daimler on its own merits is a growth company and the Mercedes-Benz brand is the jewel. His parting words to me were "as this spin-off or sell-off gets closer, DCX will lift like a balloon on Ascot Day." (Remember, he's British!)

He reasoned that profits generated by the Mercedes cars, trucks, and buses are being drained by the poorly run, bloated Chrysler division. Chrysler was the drag because of union issues, long-term health care commitments, and lousy facilities. Daimler, left alone, is a well-run and efficient auto/truck manufacturer with excellence in its engineering and production facilities. He may well be right.

Yesterday, Daimler was up $4.76 per share, and since early March when all this talk of spinning/selling off Chrysler began, the stock has moved up from $67 to $83, a huge move in a difficult market environment.

I spoke with him again this morning and, as expected, he is taking the victory lap. The "I told you so" was mentioned three or four times in our discussion between sips of tea. He exclaimed that Daimler shareholders will now demand that Chrysler be unloaded, as shareholders are now beginning to understand the power of Daimler's stock without Chrysler dragging it down. He said his price target is $100 to $110 for Daimler. He went to say, "I understand how you blokes get emotional about an American institution like Chrysler, but it is profit-proof in its current position."

He again is probably right, and he did tell me so ...

Georges Yared is the author of Stop Losing Money Today and Baby Boomer Investing. Please visit www.georgesyared.com