Who really took whom for a ride?

In Taken for a Ride, their widely-read book on the DaimlerChrysler deal, authors Bill Vlasic and Brad Stertz present a view that's become Conventional Wisdom among automotive insiders: that Daimler-Benz's egomaniacal chairman, Juergen Schrempp, overwhelmed his Chrysler counterpart, Robert Eaton, slickly pulling off a takeover disguised as a "merger of equals."

It's an image the dangerously self-confident Schrempp is only too happy to embellish. In an October interview with the Financial Times that's now come to haunt him, Schrempp proclaimed that "The structure we have now with Chrysler [as a stand-alone division] was always the structure I wanted."

For his part, Bob Eaton has had little, if anything, to say, since retiring from DaimlerChrysler earlier this year. Who can blame him? In print, and in everyday conversation, Eaton is routinely portrayed as a bumbling hick, prone to crying jags, who simply wasn't up to the task of taking on the strategically-minded Schrempp. That portrayal is unflattering, and not entirely unfair-but not entirely accurate, either.

Without sounding like an apologist for Chrysler Corp's last American chairman, it may be time for some revisionist thinking.

The image of Eaton as incompetent belies the reality of the executive who fended off the hostile $20.5-billion takeover attempt of the shrewd Las Vegas raider, Kirk Kerkorian. (Of course, Eaton's verbal missteps may have encouraged Kerkorian's bid, in the first place.) It was this costly, draining battle that led to the first contact between Eaton and Schrempp, the German offering himself as a white knight ready to battle back the black-hatted corporate raider. Though those initial discussions went nowhere, the door was open, and in early 1998, when Schrempp paid another visit to Chrysler headquarters, the mood was different, and the marriage proposal was accepted.

There's no question that in the two years since the deal was completed, the U.S. automaker has been subsumed, becoming little more than a foreign outpost for the German-based DaimlerChrysler. But was this inevitable? And was it part of a conscious pact-with-the-devil for Eaton, a knowing effort to unload a company that he was well aware was in trouble and couldn't continue on its own?

You'll find a lot of scared, frustrated and angry people populating the remains of the Chrysler empire these days. And they're no more fond of Schrempp than Eaton. But most of the automaker's problems can be traced back to long before the completion of the 1998 deal. Indeed, one can make a fair argument that in 1998, the seemingly successful Chrysler Corp was already living on borrowed time. It was developing passenger cars that consumers wouldn't want. And even with its most successful product lines, its Jeeps and minivans, Chrysler was failing to recognize significant shifts in the market.

As good as Jeep is, it continues to design vehicles for the Rubicon Trail. Today's sport-ute buyers want vehicles that will handle I-5, the Southfield Freeway or Route 22. Unless you include the PT Cruiser, Chrysler entirely missed the fast-growing crossover segment. Then there are the new minivans. Great vehicles, no question, but they fall short on the government crash tests, don't have a foldaway rear seat, continue to suffer transmission problems, and look exactly like the last-generation models.

Now, this isn't to ignore any of the complaints against Stuttgart. Daimler's heavy-handed management style has led to an exodus of talented managers. It is quickly shattering the unique relationship Chrysler Corp. had built up over the years with its suppliers. And having Germany breathing over your neck hasn't encouraged a lot of free and creative thinking at the Chrysler Technology Center.

But Germany, at worst, should shoulder only a small share of the blame for Chrysler's $512 million third-quarter loss, for the slide in Chrysler sales, and for the sad fact that had Chrysler Corp. remained independent, its very survival would have been in doubt in the recession that seems inevitable next year.

And that brings me back to the theme of this letter. Whatever Juergen Schrempp may have had in mind for Chrysler, he paid $36 billion for the company. That was a nearly 80-percent premium over Kirk Kerkorian's hostile takeover bid. Those shareholders who took the money and ran-very quickly-made a lot of money. Those who didn't have taken a ride of their own, with DC shares down by half since the deal was done. But what would they have been facing had Chrysler remained independent? One only has to recall the $3-a-share price of the early 1980s and the rock-bottom prices of a decade ago to recognize that Chrysler likely would have bottomed out on its own around now. Intentional or not, Eaton likely got top dollar at the precise moment when Chrysler appeared to be strongest. Even by early 1999, it would have commanded far less of a premium.

Considering the massive problems DaimlerChrysler's U.S. subsidiary now faces, one has to ask who really pulled off the coup? Were the Germans really the ones taken for a ride?

Paul A. Eisenstein