DaimlerChrysler: "A Failed Experiment" (updated Chrysler sold discussion)
#1
Speaks French in Russian
![](https://www.clublexus.com/forums/images/ranks/rank-smod2.gif)
Thread Starter
![Default](https://www.clublexus.com/forums/images/icons/icon1.gif)
Professor Ferdinand Dudenhöffer, Director of the Center of Automotive Research at Gelsenkirchen Technical College, told DW-WORLD.DE that DaimlerChrysler has a bright future without the loss-making Chrysler business.
http://www.dw-world.de/dw/article/0,...434077,00.html
http://www.dw-world.de/dw/article/0,...434077,00.html
http://www.dw-world.de/dw/article/0,...434077,00.html
The German-US auto giant officially confirmed on April 4 that it is in talks to sell Chrysler amid growing pressure from shareholders. It has been nine years since the world's fifth bigger carmaker was formed through a 27-billion-euro ($36-billion) merger of Daimler and Chrysler. Last year Chrysler posted an operating loss of 1.12 billion euros ($150 billion).
Former CEO Jürgen Schrepp called the merger of Mercedes-Benz and Chrysler "a marriage made in heaven" in 1998, but was it ever a good idea?
Today we can see that it was a failed experiment. They never managed to use common parts and components. Over the last nine years they have really been separate companies which functioned under one holding entity. It's really no surprise that DaimlerChrysler will sell Chrysler because the division has serious economic problems and it has no links to the other parts of the company.
Could it have been possible for the two companies to share more of their manufacturing?
The question is: could you use the same platforms and components for a premium car as for a car manufactured at higher volumes? We know that it's possible in the industry. Look at Toyota for example -- they have the premium Lexus brand and the mass-market Toyota cars. These two brands share 80 to 90 percent of their components. Even Porsche and VW use common components. The Porsche Cayenne is in principle the same car as the VW Touareg (SUV). So it is possible to have commonalities between premium and high-volume cars, but DaimlerChrysler just didn't do this.
Why not?
The philosophy and the management styles of the Swabians and the Americans are rather different. The Mercedes-Benz people are very proud and don't communicate much with the Americans and the same applies to Chrysler. Chrysler felt that if they used Mercedes parts their cars would be too expensive and Mercedes said that if they used Chrysler parts the quality and the exclusivity of Mercedes cars would be lost. Therefore they didn't cooperate.
How much of a problem is it for Chrysler that they don't make small, economical cars that are cheaper?
At the moment it is a big problem, because Chrysler has only concentrated on the US -- 90 percent of their cars are sold on the US market. Chrysler is in line with General Motors and Ford. All three companies have big problems due to the fact that they are offering a lot of gas-guzzlers in the US, like SUVs and pick-ups. What we have seen is that consumers have changed their minds and are opting for more fuel-efficient cars and that is a problem for Chrysler, as well as Ford and General Motors, that they have to solve. That will take time.
Do you think DaimlerChrysler will sell Chrysler?
Yes, I think they are preparing to sell. They have been in conversation with various investment companies and I think in three to six months it will be sold to one of these groups.
If Chrysler is so unsuccessful, why would anyone want to buy the company?
At the moment we haven't seen a carmaker interested in buying Chrysler -- the company in its present form would be difficult to continue successfully. It produces less than three million cars per year and so it doesn't have strong economies of scale in its production. So it's more a question of looking at who could use parts of the Chrysler Company. Financial investors go into companies, break up them up and sell the successful parts. For example the supplier business -- the component productions and the press shop and these parts could be sold and purchased by other suppliers. Brands could also be sold -- Jeep is a very successful brand, others like Dodge and Chrysler itself are weaker. They may be sold, for example to Chinese carmakers who are strong and looking to capture the American market.
CEO Dieter Zetsche was a hero at DaimlerChrysler for a while because of the success of his restructuring program in Detroit, although some of the gains he made have not lasted. Do you think will stay on as CEO?
I am very sure that he will continue as CEO of DaimlerChrysler. We can see now that Zetsche hasn't taken one false step in his two years as DaimlerChrysler CEO. He started to fix the quality at Mercedes and now they are coming out with new products, such as the E-class. Currently the C-class has been very successful in some markets, like Germany. Zetsche is the guy who started thinking about the future of Chrysler and the future of Mercedes and he started the process of talking to other parties about selling Chrysler. So he has done everything necessary to bring the group back to profit, so from my point of view there is no reason to change management.
Shareholders have been very unhappy about the company's performance. Will they be more optimistic now that a sale of Chrysler is likely?
I think they can be very optimistic for the future because we think Chrsyler will be sold in a few months. Then they will be left with a group which consists of Mercedes trucks, which is very strong; it's actually the global market leader. Then we have Mercedes cars which is becoming stronger and stronger. By 2009 or 2010 the new E-class will be released and that will be very important for their profitability. They also have a strong financial services arm which is very successful. Because of these three successful parts we will see stock prices continue to increase, as will the group's profitability.
Former CEO Jürgen Schrepp called the merger of Mercedes-Benz and Chrysler "a marriage made in heaven" in 1998, but was it ever a good idea?
Today we can see that it was a failed experiment. They never managed to use common parts and components. Over the last nine years they have really been separate companies which functioned under one holding entity. It's really no surprise that DaimlerChrysler will sell Chrysler because the division has serious economic problems and it has no links to the other parts of the company.
Could it have been possible for the two companies to share more of their manufacturing?
The question is: could you use the same platforms and components for a premium car as for a car manufactured at higher volumes? We know that it's possible in the industry. Look at Toyota for example -- they have the premium Lexus brand and the mass-market Toyota cars. These two brands share 80 to 90 percent of their components. Even Porsche and VW use common components. The Porsche Cayenne is in principle the same car as the VW Touareg (SUV). So it is possible to have commonalities between premium and high-volume cars, but DaimlerChrysler just didn't do this.
Why not?
The philosophy and the management styles of the Swabians and the Americans are rather different. The Mercedes-Benz people are very proud and don't communicate much with the Americans and the same applies to Chrysler. Chrysler felt that if they used Mercedes parts their cars would be too expensive and Mercedes said that if they used Chrysler parts the quality and the exclusivity of Mercedes cars would be lost. Therefore they didn't cooperate.
How much of a problem is it for Chrysler that they don't make small, economical cars that are cheaper?
At the moment it is a big problem, because Chrysler has only concentrated on the US -- 90 percent of their cars are sold on the US market. Chrysler is in line with General Motors and Ford. All three companies have big problems due to the fact that they are offering a lot of gas-guzzlers in the US, like SUVs and pick-ups. What we have seen is that consumers have changed their minds and are opting for more fuel-efficient cars and that is a problem for Chrysler, as well as Ford and General Motors, that they have to solve. That will take time.
Do you think DaimlerChrysler will sell Chrysler?
Yes, I think they are preparing to sell. They have been in conversation with various investment companies and I think in three to six months it will be sold to one of these groups.
If Chrysler is so unsuccessful, why would anyone want to buy the company?
At the moment we haven't seen a carmaker interested in buying Chrysler -- the company in its present form would be difficult to continue successfully. It produces less than three million cars per year and so it doesn't have strong economies of scale in its production. So it's more a question of looking at who could use parts of the Chrysler Company. Financial investors go into companies, break up them up and sell the successful parts. For example the supplier business -- the component productions and the press shop and these parts could be sold and purchased by other suppliers. Brands could also be sold -- Jeep is a very successful brand, others like Dodge and Chrysler itself are weaker. They may be sold, for example to Chinese carmakers who are strong and looking to capture the American market.
CEO Dieter Zetsche was a hero at DaimlerChrysler for a while because of the success of his restructuring program in Detroit, although some of the gains he made have not lasted. Do you think will stay on as CEO?
I am very sure that he will continue as CEO of DaimlerChrysler. We can see now that Zetsche hasn't taken one false step in his two years as DaimlerChrysler CEO. He started to fix the quality at Mercedes and now they are coming out with new products, such as the E-class. Currently the C-class has been very successful in some markets, like Germany. Zetsche is the guy who started thinking about the future of Chrysler and the future of Mercedes and he started the process of talking to other parties about selling Chrysler. So he has done everything necessary to bring the group back to profit, so from my point of view there is no reason to change management.
Shareholders have been very unhappy about the company's performance. Will they be more optimistic now that a sale of Chrysler is likely?
I think they can be very optimistic for the future because we think Chrsyler will be sold in a few months. Then they will be left with a group which consists of Mercedes trucks, which is very strong; it's actually the global market leader. Then we have Mercedes cars which is becoming stronger and stronger. By 2009 or 2010 the new E-class will be released and that will be very important for their profitability. They also have a strong financial services arm which is very successful. Because of these three successful parts we will see stock prices continue to increase, as will the group's profitability.
#6
Lexus Test Driver
Join Date: Sep 2006
Location: WA
Posts: 1,230
Likes: 0
Received 0 Likes
on
0 Posts
![Default](https://www.clublexus.com/forums/images/icons/icon1.gif)
I would love to see Mercedes return to their former selves before the merger (the top of the industry) without the heavy burden of lugging Chrysler on their backs hold them down.
Trending Topics
#8
Lexus Fanatic
![Default](https://www.clublexus.com/forums/images/icons/icon1.gif)
Today we can see that it was a failed experiment. They never managed to use common parts and components. Over the last nine years they have really been separate companies which functioned under one holding entity.
![Egads!](https://www.clublexus.com/forums/images/smilies/pat.gif)
Look at the Chrysler 300, Dodge Magnum, Charger, and the upcoming Dodge Challenger.....a shortened version. The whole basic platform....unibody, frame, transmission, and final-drive system......is derived directly from the Mercedes E-Class. Only the skin, interior, and engines are different.
And there are even some common parts and designs inside as well. The Dodge/Chrysler Autostick shift lever and many Mercedes shift levers share the same design.....a side-to-side motion for bumping gears up and down manually compared to the fore-and-aft motion and steering-column paddles used in most other makes.
This is a particularly outrageous statement, considering that it came from Shrepp himself. With people like this in charge, no wonder the company is in such deep ******.
Last edited by mmarshall; 04-12-07 at 11:58 AM.
#9
Lexus Fanatic
iTrader: (20)
![Default](https://www.clublexus.com/forums/images/icons/icon1.gif)
DaimlerChrysler actually has some other HUGE problems such as their investment stake in EADS, better known as Airbus, the European, semi-private behemoth maker of commercial airliners. Airbus is losing money like a drunk in a casino due to the YEARS of delays for the A380 and strategic blunders.
It's too bad if they do sell Chrysler because when they got into it they must have known about Chrysler's problems so I wonder what's prevented them from turning it around. Maybe they just hoped for stronger sales which haven't materialized.
I just went to DaimlerChrysler's web site though, and I'd forgotten the guy that runs it is the SAME GUY who did those hilarious commercials a while back. I checked out a video by him on BlueTec. Anyone who can bring the name of Jerry Lee Lewis into a video about diesel engines is my kinda guy.![Big Grin](https://www.clublexus.com/forums/images/smilies/biggrin.gif)
http://www.daimlerchrysler.com/dccom...0-0-0-0-0.html
It's too bad if they do sell Chrysler because when they got into it they must have known about Chrysler's problems so I wonder what's prevented them from turning it around. Maybe they just hoped for stronger sales which haven't materialized.
I just went to DaimlerChrysler's web site though, and I'd forgotten the guy that runs it is the SAME GUY who did those hilarious commercials a while back. I checked out a video by him on BlueTec. Anyone who can bring the name of Jerry Lee Lewis into a video about diesel engines is my kinda guy.
![Big Grin](https://www.clublexus.com/forums/images/smilies/biggrin.gif)
http://www.daimlerchrysler.com/dccom...0-0-0-0-0.html
#10
Lexus Fanatic
![Default](https://www.clublexus.com/forums/images/icons/icon1.gif)
DaimlerChrysler actually has some other HUGE problems such as their investment stake in EADS, better known as Airbus, the European, semi-private behemoth maker of commercial airliners. Airbus is losing money like a drunk in a casino due to the YEARS of delays for the A380 and strategic blunders.
It's too bad if they do sell Chrysler because when they got into it they must have known about Chrysler's problems so I wonder what's prevented them from turning it around. Maybe they just hoped for stronger sales which haven't materialized.
#11
![Default](https://www.clublexus.com/forums/images/icons/icon1.gif)
Well, for one thing, outside of Boeing, Airbus doesn't have much competition in the large civil airliner buisness....and not a not of pressure to make profits. McDonnell-Douglas is gone...having been bought by Boeing. Lockeed-Martin doesn't build the L-1011 any more either, so they are out.
Never mind just Chrysler's problems.......at the time M-B "merged" with Chrysler (it was really a buyout, as we know now), M-B had enough problems of their own. Lexus and Infiniti had, by then, placed enormous competition on them in the upmarket-vehicle buisness, in addition to M-B's traditional rival, BMW. M-B not only was engaged in cost-cutting to stay competitive with the Japanese, but was also, by that time, starting to be plagued with decreasing quality and increasing unreliability in their vehicles....which has continued, to this day, to steadily grow worse.
Never mind just Chrysler's problems.......at the time M-B "merged" with Chrysler (it was really a buyout, as we know now), M-B had enough problems of their own. Lexus and Infiniti had, by then, placed enormous competition on them in the upmarket-vehicle buisness, in addition to M-B's traditional rival, BMW. M-B not only was engaged in cost-cutting to stay competitive with the Japanese, but was also, by that time, starting to be plagued with decreasing quality and increasing unreliability in their vehicles....which has continued, to this day, to steadily grow worse.
The "Merger of Equals"is also a joke since I have yet to see where a merger of equals ever worked. In this regard one company is buying the other and guess what; the acquiring company's share of the equal is always greater than the company being acquired.
From day one I questioned the sanity of this transaction. The cultures of the 2 companies were so totally different that I wondered if it could ever work. You had the German "It Will Be Done" approach and the gunslinger approach of Chrysler. The cultural differences were probably over looked and proved fatal in the long run. I once made an acquisition where the strengths of the 2 companies complimented each other so well that on paper it was a situation where 1 +1 equalled 5. As it turned out the cultures were diametrically opposed and the transaction almost failed until I replace all of the management from both companies.
Many person has said that overlooking simple things like this could not happen in a large company such as Daimler Benz. To that I reply ;whoever said that big is better.
This is a significant blunder for DC but they are not alone. Many other mergers have gone astray in the business world. For those of you who can remember; does the company IT&T ring a bell. Harold Geneen was acquiring anything he could get his hands on in the 70's and built a huge conglomerate. Today they are a mere shadow of what they once were.
#12
#13
Guest
Posts: n/a
![Default](https://www.clublexus.com/forums/images/icons/icon1.gif)
I love all of your theories and conjecture on this subject. I would like to ask all of you how many acquisitions have you made? In my career I have made 20 acquisitions and have also done some significant divestitures. One thing that I learned many years ago is that you never make an acquisition based on the synergies of the 2 companies since they rarely materialize. From what I recall when this first took place SYNERGY was one of the major driving forces behind this "merger of equals". The synergy was supposed to be Daimler's engineering expertise and Chrysler's design expertise.
The "Merger of Equals"is also a joke since I have yet to see where a merger of equals ever worked. In this regard one company is buying the other and guess what; the acquiring company's share of the equal is always greater than the company being acquired.
From day one I questioned the sanity of this transaction. The cultures of the 2 companies were so totally different that I wondered if it could ever work. You had the German "It Will Be Done" approach and the gunslinger approach of Chrysler. The cultural differences were probably over looked and proved fatal in the long run. I once made an acquisition where the strengths of the 2 companies complimented each other so well that on paper it was a situation where 1 +1 equalled 5. As it turned out the cultures were diametrically opposed and the transaction almost failed until I replace all of the management from both companies.
Many person has said that overlooking simple things like this could not happen in a large company such as Daimler Benz. To that I reply ;whoever said that big is better.
This is a significant blunder for DC but they are not alone. Many other mergers have gone astray in the business world. For those of you who can remember; does the company IT&T ring a bell. Harold Geneen was acquiring anything he could get his hands on in the 70's and built a huge conglomerate. Today they are a mere shadow of what they once were.
The "Merger of Equals"is also a joke since I have yet to see where a merger of equals ever worked. In this regard one company is buying the other and guess what; the acquiring company's share of the equal is always greater than the company being acquired.
From day one I questioned the sanity of this transaction. The cultures of the 2 companies were so totally different that I wondered if it could ever work. You had the German "It Will Be Done" approach and the gunslinger approach of Chrysler. The cultural differences were probably over looked and proved fatal in the long run. I once made an acquisition where the strengths of the 2 companies complimented each other so well that on paper it was a situation where 1 +1 equalled 5. As it turned out the cultures were diametrically opposed and the transaction almost failed until I replace all of the management from both companies.
Many person has said that overlooking simple things like this could not happen in a large company such as Daimler Benz. To that I reply ;whoever said that big is better.
This is a significant blunder for DC but they are not alone. Many other mergers have gone astray in the business world. For those of you who can remember; does the company IT&T ring a bell. Harold Geneen was acquiring anything he could get his hands on in the 70's and built a huge conglomerate. Today they are a mere shadow of what they once were.
#14
![Default](https://www.clublexus.com/forums/images/icons/icon1.gif)
I've always wondered what will happen. I mean, I can see Chrysler benefitting from using MB parts (e.g. Crossfire based on the old SLK platform) but I never saw what MB had to gain from Chrysler. It's not like they were having issues with the American market. I saw Chrysler as the Acura of the American manufacturers. i.e. they produce nice looking cars that bridge the gap between common cars and luxury cars, sorta like what Acura is doing between the Toyotas and Nissans and the Lexuses and Infinitis.
Granted, the quality wasn't up to snuff but that's what I gathered from the cars they sold.
Granted, the quality wasn't up to snuff but that's what I gathered from the cars they sold.
#15
Lexus Fanatic
![Default](https://www.clublexus.com/forums/images/icons/icon1.gif)
I've always wondered what will happen. I mean, I can see Chrysler benefitting from using MB parts (e.g. Crossfire based on the old SLK platform) but I never saw what MB had to gain from Chrysler. It's not like they were having issues with the American market. I saw Chrysler as the Acura of the American manufacturers. i.e. they produce nice looking cars that bridge the gap between common cars and luxury cars, sorta like what Acura is doing between the Toyotas and Nissans and the Lexuses and Infinitis.
Granted, the quality wasn't up to snuff but that's what I gathered from the cars they sold.
Granted, the quality wasn't up to snuff but that's what I gathered from the cars they sold.