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Chrysler: Who Took Whom for A Ride?

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Some years back, my old friend, Bill Vlasic, collaborated on an excellent book about the behind-the-scenes machinations that led to that, ahem, “merger of equals,” DaimlerChrysler. The bottom line of that effort, Taken for a Ride, was that the skillful and Machiavellian maneuvers of former Daimler CEO Juergen Schempp simply overwhelmed his less-than-brilliant counterpart, Chrysler Chairman Bob Eaton.

There’s little doubt that Eaton was in over his head and may have simply wanted to ink a deal, no matter how lopsided. But in the wake of today’s news, with DCX all but giving its U.S. subsidiary away to the private investment group Cerberus, one has to wonder who really took whom for a ride.

The likely answer is that neither Daimler, through Schrempp, nor Chrysler and Eaton, had a clue what they were getting into. One man’s Napoleonic grand vision, the other’s insecurities and limited scope, led to the creation of an entity that never could and never would coalesce into the grand, trend-setting global entity that we were promised.

A big part of the problem can be found in Germany. There was a reason Schrempp used to refer to his own corporate headquarters as the “bullshit palace.” And he wasn’t even referring to corporate press releases. The problem is that the folks in Stuttgart believed their own BS. Worse, they had a hugely inflated sense of self – easy to understand, I guess, when you’re building the benchmark luxury brand – and never really valued what they had with Chrysler. The resentment was palpable and as a result, the trans-Atlantic maker never really came close to achieving the potential synergies it needed to justify the takeover.

Chrysler had its own issues and made mistake after mistake, notably continuing to build vehicles that far too few customers wanted to buy – then dumping them into storage lots and, ultimately, loss-making fleets. The U.S. automaker destroyed its own brand, further justifying the scorn of its German sibling.

It will be interesting to see what happens now, with the renamed Daimler AG maintaining a 19.9-percent stake in Chrysler. It would be ironic if it now treats the U.S. brand as a valuable investment and takes the steps necessary to make that pay off – perhaps sharing more of its parts, technology and even platforms.

When Schrempp and Eaton jointly rang the opening bell at the New York Stock Exchange in November 1998, they insisted their new entity would be a role model for the rest of the industry, perhaps for business, in general. In a sense, they were right. The dissolution of this trans-Atlantic marriage shows exactly how a mix of hubris and self-delusion can lead to some incredibly bad decisions. And now, in the breakup’s wake, it’s the acquisition by Cerberus that may be the real sign of things to come.

Daimler Kills "Merger of Equals" With Chrysler—TheCarConnection.com
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Comments (7)
  1. >>>The U.S. automaker destroyed its own brand, further justifying the scorn of its German sibling.

    When has 'Chrysler ever had positive brand equity? Save for the minivan and Jeep loyalists; they would have been done years ago.
     
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  2. A merger of equals. I that is was fun when i first herd it and it funnier now. First the american side: How is it that some companies figure or platform and powertrain sharing works if you pu money and good enginering into the platforms and powertrains? BMW does it VW does it seem to work there for the most part. oh and i worked with tih 300/charger/magnum. why did it take this long to fiure out at chyrsler. ans sporty compact cars not just wagon thingys that are reliabe and a decent amout of standard equipment sell every where. ask honda about it. to me recreating to wheel makes about as much since as recreating the passenger car. or in other word copy the japanese guys. south hyundai did and it works
    Dear Mercedes good luck trying to keep up with BMW (my fav automobile comany) and VW
     
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  3. i was half asleep when i typed that and this, excuse me for all the typos
     
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  4. The writing was on the wall from the very beginning. DC - and take that to mean Mercedes-Benz - didn't want to "dilute" their brand by sharing platforms with Chrysler, in an age when their competitors at Lexus make no bones about their Toyota underpinnings, and yet none of their customers seem to take this as a slight on the quality and prestige of their cars. At the same time, Chrysler screwed up with such ugly ducklings as the Jeep Compass, the Dodge Caliber, and the Chrysler Sebring, probably chasing off potential buyers in droves who know an eyesore when they see one. Chrysler needs help from folks like Tom Gale, not Freeman Thomas, to put out cars that appeal to the market - they need someone who can design an interior that doesn't look and feel like it came out of a Revell box, and which doesn't look like it could have come from either the Dodge Ram or the Dodge Charger, almost indistinguishably. The HEMI isn't enough - they need real style. Here's hoping that Cerberus pushes the company to excel, not just to experiment.
     
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  5. I remember a passage from the Vlasic book about what happened after the Germans took over in the PR department. Chrysler was always known for clever and creative press kits--the Durangos/Wheaties press kit is an example. I have been in the middle of the scrum when the Chrysler kits were released--you'd have thought they were handing out $100 bills. When the Germans came in, they told Chrysler PR to use the Mercedes type kit--white paper, some photos, in a plain notebook.

    Mercedes was like the folks who fall in love with a charming neighborhood of smallish brick houses and tree lined streets, buy a house, tear it down, cut down the trees and put up a McMansion. They liked the idea of American creativity and agility, but then imposed their culture that suppressed those same values.
     
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  6. American car companies have been getting their asses kicked for about 30 years now. The Japs, the Germans, more recently the Koreans, and soon the Chinese.

    The obvious incompetence at these Corporations gets me in a rage.....because there is no good reason why Ford, GM, and Chrysler, could not have assessed their weaknesses and made the necessary changes in time to effectively compete in a world market. It's all but over, except for maybe... GM

    What a sad and disturbing story of a whole segment of American manufacturing that could not get it's head out of it's ass in time to save it's own life!

    They have only themselves to blame! The competition made a better product! Period!!
     
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  7. Good morn readers..................well I gotta say.........as above Mr Magoo.......
    is 100 % right.
    Sad but true reality does not lie.............
    Have a positive day
     
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