Chrysler is competing in a tough North American market

The figure is down 19% from 1.54bn euros in the third quarter of last year and fell short of analysts' expectations.

The Chrysler division has experienced a tough time in North America, where there has been a car price war.

Overcapacity and low productivity compared with rivals in Japan also hampered performance.

Sales in the United States have been propped up by incentives such as zero-interest finance, which have cost thousands of dollars per vehicle.

"The numbers show they (still) have some problems and the problem is the US market, concerning Chrysler," said Martin Sachsenmaier, a fund manager at Frankfurt Trust.

Worldwide brands

But the company said it was sticking to its goal of achieving a 5bn euros operating profit for the full year, although "considerable market risks" remained.

Overall, DaimlerChrysler posted a net loss of 1.65bn euros ($1.92bn, �1.15bn) in the third quarter. Part of this was due to writing down the value of its stake in European aerospace company EADS by 2bn euros.

The company, which sold 1.1 million vehicles worldwide in the quarter, employs 375,000 people worldwide and has brands including Mercedes-Benz, Maybach, Smart, Chrysler, Dodge and Jeep.

Although well into a three-year overhaul, it has still to see the promised results of the 1998 merger between Germany's Daimler-Benz and US Chrysler that created it.

In those five years, Daimler Chrysler has lost more than two thirds of its stock market value.