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Updated from 4:35 p.m. EDT

DaimlerChrysler

(DCX)

reported a 37% drop in third-quarter profits on Wednesday as its U.S.-based Chrysler unit dragged down its results, but the automaker reiterated that it has no plans to sell the troubled division.

Shares of DaimlerChrysler jumped $2.35, or 4.5%, to $54.68 Wednesday on speculation that a sale or spinoff of Chrysler Group is in the works. While the company made no comments on its conference call signaling a sale, it also didn't specifically rule it out.

"We don't exclude anything here to look at," Chief Financial Officer Bodo Uebber said on the call.

Late Wednesday, however, DaimlerChrysler issued a statement saying that there are no plans to sell Chrysler Group.

"During today's third-quarter earnings analyst/media conference call, the company appropriately chose not to add to the speculation regarding this topic," DaimlerChrysler said. "However, the resulting coverage and comments made it clear that this "not-for-sale" statement needed to be reaffirmed."

Early Wednesday, the German company said its quarterly earnings fell to $686 million, or 67 cents a share, from the $1.09 billion, or $1.07 a share, it logged for the same quarter last year.

Revenue dropped 5% on a constant-currency basis to $44.6 billion as its worldwide vehicle sales dropped 14% from a year ago to 1 million units.

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At the company's Mercedes division, operating profits more than doubled to $1.26 billion, powered by successful new launches of its S-Class and E-Class sedans. However, its Chrysler Group swung to an operating loss of $1.48 billion, reversing a profit of $393 million in the same quarter last year. The results reflected continued difficulties for U.S.-based automakers.

"Due to higher fuel prices, industry demand is shifting away from pickups, SUVs and minivans towards more fuel-efficient passenger vehicles," Uebber said.

In September, DaimlerChrysler warned investors that high levels of inventory build-up at Chrysler dealerships would results in a loss for the quarter.

"Due to the high dealer inventory levels at the end of the second quarter, decreased demand from dealers and the market shift to more fuel-efficient vehicles, the Chrysler Group reduced production levels and factory shipments during the third quarter," Uebber said.

Now, the company's management has formed seven teams focused on various aspects of Chrysler's business in order to plan a restructuring for the unit. Uebber declined to speculate on what form the restructuring will take.

The company said it does plan to implement further cuts in production during the fourth quarter in order to reduce dealer inventories and clear the way for the current product offensive. DaimlerChrysler expects Chrysler, owner of the Chrysler, Jeep and Dodge brands, to post a loss of around $1.3 billion for 2006.

DaimlerChrysler maintained its full-year operating-profit target of $6.3 billion despite recent reversals at one of its big investments,

European Aeronautic Defence & Space

, owner of Airbus.

The automaker expects full-year revenue to rise slightly from last year's $190 billion.

"The strong demand for commercial vehicles, especially in the heavy categories, should continue for the rest of this year, although with lower growth rates," the company said. "In view of the ongoing overcapacity in the automotive industry, DaimlerChrysler assumes that the situation of intense competitive pressure will continue."