With cars and trucks piling up, it’s looking like the Daimler/Chrysler merger/takeover is on the skids. Mergers are always tricky in the auto business. It can work– if both sides put forth an effort. Unfortunately the DCX mess looks rather familiar…
There are three kinds of companies in the automobile industry: mass market manufacturers (e.g. Toyota and GM), niche players (e.g. Subaru or pre-acquisition Saab) and luxury automakers (e.g. BMW or Porsche). The first depend on volume, the second rely on selling a narrow product range at a premium price and the third must unload large numbers of high margin vehicles (or a limited run of extremely profitable products).
Obviously, mass-market makers have the most financial clout. They can afford to buy-up other companies; usually cash-strapped niche makers. Occasionally, one mass-market automaker will absorb a weaker one, either for marketing power or additional production capacity. These acquisitions usually work out– though the smaller party is completely dominated/ annihilated by the buyer (Toyota/Daihatsu, GM/Daewoo, Volkswagen/Skoda, etc). But there’s another type of acquisition: when a “mass-luxury” brand buys up a downtrodden mass-market player. BMW tried it, and the results were disastrous.
In the early 1990s, automakers were flush with cash. BMW, one of the smallest independent world producers, was feeling vulnerable. (Car sales move in cycles; the lower end of the luxury market is always vulnerable to shrinking demand.) Without entries in the mass market, BMW felt a need to get in with a volume manufacturer. They approached Honda about a partnership– and were rebuffed. Barely changing tack, BMW went after the closest thing to Honda they could find: Rover.
The Rover Group was comprised of the remnants of several famous British carmakers. The company had been struggling since the late ‘60’s. It was on government life-support through the ‘70’s and ‘80’s. At the time of sale, British Aerospace owned Rover (they bought it for a song from the British Government). It was profitable. Yes but– a closer examination should have set off alarms.
By then, Rover was selling tarted-up Hondas to counter their loss of market share. It no longer had the manufacturing capacity, overseas dealers or engineering staff to play in the mass market. BMW thought they were buying a cut-price Ford. What they got was a second-rate Acura.
After buying Rover from British Aerospace (and ousting Honda), BMW got down to cases and discovered just how deep the rot was. Rover’s only remaining mass-market cars were over 10 years old (and had never been world-beaters). The Honda-based units slotted just below BMW’s existing line, and several were due for replacement. Land Rover was at least famous and profitable, but quality problems were rife. Instead of being a window into the mid-market, Rover became a money-pit.
After a few years, BMW took the new MINI and ran. They sold Land Rover to Ford and “gave” the other new car– an up-market sedan called the Rover 75– to a group of investors along with a large “loan.” In the end, Rover died, Ford got Land Rover (still with quality issues) and BMW got one nice selling niche car with an English factory to match– but no mass-market presence and huge financial losses.
Daimler’s purchase of Chrysler is eerily reminiscent of Bimmer’s British misadventure. At the time of purchase, the “Crisis Corporation” and Rover both had shrunken market share, with profits depending on a few up-market vehicles. Neither had significant fleet or foreign sales (though being confined to the US market beats being stuck in England). Both had profitable niche off-road makers in tow. Both even had a Japanese “partner” (though Rover was dependent on Honda, Mitsubishi leaned on Chrysler). Neither company had a significantly profitable presence in the heart of their home market.
Once bought, Chrysler developed a “hot” set of cars in high-end niches (the new 300 triplets) using previous-generation Mercedes technology. And then… nicht mehr. Although Chrysler and Mercedes will continue to share “unseen” parts and back office functions (until they don't), cross-brand platform sharing has been declared verboten. "A Mercedes will remain a Mercedes,” Daimler Chrysler’s head of development told a German union gathering yesterday. “And may not share a platform with anyone [save Maybach]."
Thus the new Chrysler Sebring is based on a warmed-over Mitsubishi platform, the company’s getting slaughtered in the small car market, the once profitable minivan segment is shrinking for want of innovative product and Dodge’s truck market is under siege (and just got news of layoffs). Through all this, despite their investment, Germany seems happy to watch its US “equal” tie an American made noose around its neck. In fact, it’s only a matter of time before Chrysler’s German masters sell off Jeep and/or the whole shooting match.
Of course, there is a wider lesson here: by the time a mass-market automaker is weak enough to be bought it’s too weak to compete. And eventually dies.
The writing seems to be on the wall. Head of Daimler development basically hints at the fact that they won’t be helping Chrysler, and that there will be no cross-platform sharing going on. In other words, it’s almost like one big “get out” message being shouted by Daimler to Chrysler. I believe the Germans have gotten fed up with Chrysler, and if things don’t improve, a “de-merger” will be imminent.
Good article. Those that fail to learn from history…
MB and Chrysler may not share “platforms”, but the upcoming new V6 engine will be used across the board at both. Now I know why I don’t crave Benzes anymore: the idea of having the same engine in an E class as the Dodge Caravan dulls my appetite just a wee bit.
They’ll have to change the old byline from “Engineered like no other car in the world” to “Engineered like your mother’s Caravan”.
i think they still have potential…they just dont want MB to be associated with Chrysler. At 1st I think they thought..hey we will sell these because they are baby benz’s but that didn’t work. Now they need to make Chrysler its own company. the 300C is/was a hit. im sure if they take there time they can get another one.
Blue-tec diesel + small pickup truck (size of old Dakota or smaller) = HUGE success.
Nice article. Makes me wonder if Chrysler can come out of this as a niche player…even if the Germans sell it or dismantle it to the right people. Only trucks from Dodge, SUVs from Jeep, and a few desireable cars from Chrysler. Resurrect Plymouth to deliver minivans and wagons. By shrinking their portfolio and increasing brand focus, each model would get the right attention from its engineers. Think about it: American cars that actually speak to a shrewd American buyer. There would be mass downsizing and layoffs, but from what I’ve been reading in this series, it’s necessary.
Well written Mr. Dederer. Do you think that Benz should oust ALL of Chrysler or do a major workup of Chrysler’s execs? Maybe kick managements asses into gear so they turn out quality products and don’t overproduce. Learn from their mistakes. Etc etc etc…..
the 300C is/was a hit. im sure if they take there time they can get another one.
Yeah, but time is one thing Chrysler doesn’t have a lot of.
Durailer….the mass layoffs aren’t just necessary, they’re a reality. And this time, they should lay off the right people….the management that keeps sitting around doing nothing about the loss of market share. Figure one executive is equal to at least 5 or 6 factory workers, depending on what level he/she is in the corporate ladder.
Daimler underestimated the power of the UAW to obstruct.
I would think Daimler would like to retain the Jeep brand.
Jeep would make for a great global brand.
“Yeah, but time is one thing Chrysler doesn’t have a lot of.”
well do they rush more BS out the door and hope it sells or take some time and get a hit. if they have a years worth of BS sitting in a parking lot why try to hurry up and make more BS.
Im afraid of what the PT Cruiser replacement will look like. that will make or break them.
Andrew,
One point I’d add to your BMW/Rover story is that BMW needed a small car line to improve their corporate fuel economy average ahead of impending EU legislation. They sure paid through the nose for Mini, given the losses from “The English Patient.”
GM and Ford have the ability to leverage their overseas subsidiaries and partners. Ford can rely on Volvo, Ford Europe, Ford Aussie and Mazda to engineer their auto platforms. GM relies on platform engineering from Korea, Aussie and Opel.
But Chrysler is stuck. German mommy won’t allow real platform sharing and they burned their bridges with Mitsubishi. Who’s left?
Renault-Nissan.
It’s a good thing Mercedes realised it can’t sell their own cars with different sheetmetal as Chryslers and against a discount, it would seriously deplete Mercedes’ brand value, even if the technology used is outdated.
However, they should help Chrysler built quality cars by themselves. At least BMW finally achieved this with the 75, which is basically a good car (only too little too late, since the rest of the range was over 10 years old) with a independant (FWD) chassis and engines (except halve of the diesel). The Range Rover was quite good too, but that’s a different story.
Anyway, for Rover it was already too late, but I think Chrysler has a better chance. Especially with the possibility of Dodge Trucks with Mercedes diesel engines mentioned before. Although…that isn’t a permanent solution to their problem…
With all due respect, to equate Rover – as it was at the time BMW claimed it – with Chrysler at any point other than the 70s perhaps, is revisionist history gone berserk!
Rover was all niche, low volume, local product – and none of it was road worthy. Chrysler, even before the merger – has/had a lot of assets – predominant of which is daring design that is unmatched by any other maker IMHO. Cab-forward, Retro before most of even knew what retro meant, rear-wheel drive hoot spa, like the 300C and Charger, stow n go vans, and a knack for segment busting that, if executed right, can result in the piddle paddle of little feet in showrooms, and increased market share.
Rover had nothing even close to these, and even the Brits (of which I am one BTW) were generally ashamed of – “red rover, red rover, why won’t my rover turn over?” so goes the diddle.
Having said that, I am not real sure what DB’s true objective was in acquiring Chrysler (no it wasn’t a merger of equals as reported). Many are waiving around this nonsensical conspiracy notion that they claimed Chrysler only to leave it languishing on the vine, or worse. I am sorry, but I don’t really buy into this “Illuminati”- inspired explanation. Dr. Z came over and seemed to be vigorously and sincerely attempting to set things moving in the right direction – product wise, cost-wise and even labor-wise to a degree. This, to me, defies any merge, conquer and divide explanations. I could be wrong of course.
IMHO, what we are witnessing now in Chrysler’s apparent implosion is product-related and sheer and utter mismanagement in terms of production numbers, inventory control and dealer estrangement.
Bold, to-the-edge styling such as we have seen from Chrysler/Dodge is difficult to evolve with any grace and style. The 300C is a box essentially (a nice looking box but a box nonetheless), where does one take a box – if you round its edges or add curves it ceases to be a box. Where further can you go with the PT Cruiser? When does retro cease being possible? How can you make attractive front ends when you are wedded to the notion that all trucks and cars must have a Mack-truck style maw? I fear the Caliber and Charger suffer from the same design restraints.
So what happens as a result? These products, bold and captivating at first – languish and die. Unlike T and H, where it seems every 18 months subtle design changes are made, Chrysler has stale, and increasingly dated vehicles. Lot traffic decreases as a result.
Of course there are the quality issues, plastic interiors, incentive addiction, lack of competitive small cars – but we all know about that. These are entirely fixable, and shouldn’t take a rocket scientist.
In short, I believe there is a lot of life left in Chrysler, but it remains to be seen what the powers that be do or fail to do next. The (U.S.) marketplace has embraced their daring design in the past; so if they can up the quality, introduce some truly excellent small autos (the Hornet looks promising, but I say they need at least 2-3 more), unabashedly copy Audi’s interiors, and reinvigorate its dealer network – then who knows!
I (am not ashamed to confess that I) still have a (modified) 1999 Dodge Neon RT BTW – and though unceremoniously cheap in every regard, I absolutely love driving this little car.
SherbornSean: But Chrysler is stuck. German mommy won’t allow real platform sharing and they burned their bridges with Mitsubishi. Who’s left?
Renault-Nissan.
Does this mean we can look forward to a Dodge Alliance? Yikes!
As for why Chrysler is in its current mess – I don’t believe that Daimler bought Chrysler to ruin it.
German manufacturers, however, do not have a very good record of competing in the American mass market. BMW and Mercedes have been upscale brands in America – even more so than in their home market.
They don’t know how to compete in the “meat and potatoes” market segment with the Americans, let alone the Japanese. Even VW was getting its tail kicked by the Japanese through the early 1990s, until it “rediscovered” its roots as the affordable German driving machine and brought out the New Beetle to rekindle memories of the first one. This worked for a few years until lousy quality, a weak dealer network and strong entries from Mazda, Acura and Honda caught up with VW.
Knowing Germans (my maternal side of the family is from Germany), I wouldn’t be surprised if Daimler management looked at the United States and assumed that unsophisticated Americans would buy anything, no matter how cheap the construction and how unrefined the driving experience, as long as the price was low enough and a few ‘Merican design cues were thrown into the mix.
Germans are VERY proud of their automobile industry, and while they have much to be proud of, they are also blind to its weaknesses and the threat posed by the Japanese. In many ways they remind me of Americans around 1965. If the vehicles aren’t selling, it’s the potential customers’ fault. The overproduction of Chrysler vehicles reflects this stubborness and refusal to admit a mistake.
They completely underestimated the strength of Honda and Toyota in the mass market segments – just as Mercedes initially underestimated the effort that Toyota was able to put forth with Lexus in the luxury class. For that matter, in most cases, the Chrysler offerings were also inferior to those from GM and Ford.
At this point, I wouldn’t be surprised if Daimler simply throws in the towel at Chrysler, or at least keeps Jeep and sells Dodge and Chrysler to a company that has a better track record of doing what it takes to succeed in the United States, and also wants a V-8 and a full-size pickup (Hyundai, anyone?).
I just don’t believe that Daimler has the knowledge and skill necessary to make Chrysler a success.
CarNut: while tha analogy is not perfect, there are plenty of similarities. Pre-BMW Rover had a very deep development relationship with Honda, and their cars at the time were either platform engineered or badge engineered Hondas. In fact, Honda was furious when BMW bought Rover, because Honda saw a long-term strategic relationship with Rover, and had invested a lot in that. They were not bad cars, and the 75 (post BMW) was generally considered an excellent car.
The real issue is not how similar or not Chrysler was to Rover, but the fact that both acquisitions were driven by hubris, which both MB and BMW at the time had plenty of. They both thought that their intrinsically superior engineering prowess would be able to fix what was wrong at Chrysler and BMW. And they both gave it a good shot (of money) and produced some decent new cars (300C, 75). But they failed to see big picture, which is that both companies, and their respective markets, had deeper issues that went beyond a quick infusion of German engineering.
The domestic manufacturers are wasting time and money looking for the next big thing that will save them from corporate oblivion. The next big thing is the last big thing. Build a quality product, inspire confidence with a superior warranty, and treat customers with integrity and respect.
Geeber: You’re right; I’ve followed the car industry scene from both the German and US perspective, and the hubris that the Germans have had, and still have about the Japanese is remarkable. And that’s what made them make the mistake of buying Chrysler at a time when the big 3’s declining share of the market vis a vis the Japanese was already almost 20 years old! The got suckered into thinking that the brief burst of profitability Chrysler had in the 90’s was something other than a blip in a long downtrending line on the chart.
what I see at chrysler is this mind boggling following gm and ford with a blizzard of new models. The sebring is now being seen as not enough to juice the sales. What this compass and nitro stuff is but a diversion to getting a few models right.Are they ready with an updated 300? If not look out. The wrangler, it seems to be a success, why not make more instead of these other jeep wannabees? Must the dodge line of trucks be the thirstiest in detroit? Chrysler must make less types of cars (forget imperial please) and try and ring the bell with a few good contenders. ie the 300 should be honed and refined, the minivan should set the standard for the industry. A sebring should be an accord camry alternative especially with the rag top. I doubt chrysler needs a full dodge car division. My local dealer has chrysler, jeep, dodge in one agency. He needs the airport behind him to store at least six of each model with all of their variations. His floor plan must be like the Columbian national debt. Let’s get real chrysler.
If you look back to the way things were, early on, after Daimler acquired Chrysler – admittedly, I too thought of it as a merger until I read more and talked to more people – it seems to be a matter of culture clash. It was reported in USA Today,, as I recall, that Chrysler executives were required to be at meetings, led by DaimlerChrysler executives, where the language spoken was German and no translators were there for the Americans. If that isn't the epitome of "our way or the highway," what is? Selling cars as Chryslers, with platforms and drivetrains, lifted from departing generations of Mercedes-Benz cars – think Chrysler Crossfire – won't work with that segment of automotive enthusiasts who insist on a uniquely American product, such as the Hemi-head V8. Of course, given the cost to tool up and build engines unique to the product such may be out of the league of Chrysler, most especially if Daimler cuts it loose. I think the comparison to Rover actually works pretty well. As the Rover Group shifted owners, pieces were abandoned and some were kept. If Chrysler is left behind, or sold, by Daimler, I could see where Dodge is the name that survives, while Chrysler becomes part of that Sargasso Sea of nameplates which were once a part of American culture and business.
I have never quite gotten the three pointed star religion. The truth of the matter is that it is only in the US that MB is a luxury car brand. Every where else in the world, you see MB trucks and MB taxis. What does a “C” cost with cloth seats, 2 L – 4cyl engine, 4 speed manual and no radio? $18K?
I don’t much care if MB fries a $20B investment, but if it were up to me, I would figure out how to use parts from their existing lines to make new vehicles, pronto. How about an S based Imperial and a C based Sebring.
shame.
I kinda like the new charger r/t, it looks cool, and is fairly rare.
It also gets about 19 MPG in average fuel economy.
sigh.
Paul: yes, my friend, but the majority in senior mgmt at Chrysler have North American industry experience. One would think/hope that such insights would be incorporated into the conversation.
Regarding the Japanese (T and H primarily) – I suppose I will offend many here when I say that by and large, they still make largely uninspiring cars that retain their value and are built to last. They also get better and tighter with each iteration. If only a Charger or a 300C or a Caliber was built with the same precision and quality, my sense is that T and H have not a prayer. Bold styling wins every time – IF, IF (did I mention IF) consumers can have confidence that the thousands they are putting down are a good investment – that the car is good quality.
CarNut: “T and H make largely uninspiring cars”
Take you memory back to 1995: Lexus introduces the RX 300. That vehicle created the whole CUV genre. When I saw the first one, I turned to my son and said “that’s the car of the future”.
What inspiring cars were the big 3 selling in 1995? What new trends were they creating? The Tahoe ( a 4 door Blazer). need I go on?
Take your memory back to 1983, if you can: Honda unveils its new Civic line: 4 completely diferent bodies: the sedan, the hatchback, the CRX, and the highboy wagon.
What inspiring small cars were the big 3 selling in 1983? The K-car, Chevy Celebrities/Cavaliers, Ford Tempos. Need I go on?
If only a Charger or a 300C or a Caliber was built with the same precision and quality, my sense is that T and H have not a prayer. Bold styling wins every time – IF, IF (did I mention IF) consumers can have confidence that the thousands they are putting down are a good investment – that the car is good quality.
Even if DCJ came out with something this good tomorrow, the skeptical diehard import buyer (read:yours truly) would want to see a few years of good reliability ratings to back it up. Again, time’s not on their side.
Hi folks, long time listener, first time caller. No wait, I meant long time reader, first time posting.
Anyway, for years, I have been hearing about how badly the auto companies are screwing things up here in the states and how it can all be fixed if management would allow the hourly people to have a say in the design and building of the cars instead of just making them do all the work without any of their input. There was even speculation that the hourly unionized workforce could have bought Delphi when it was $0.30 per share and, as many have said at other sites, completely turned it around.
Personally, I would love to see the unions take one of these struggling car makers and put their money where their mouth is and turn it around. I would like to see DC tell the unions to go out and hire their own management team and engineering staff. Give them a few years to come up with a quality product, as they claim they can do better than any of the auto management teams can. Let them see what it’s like to be on the management and engineering side of the business. Give them the opportunity to prove that they can produce a vehicle that the general public would want at a reasonable price that allows them to make a profit. When I hear about how they think they are smarter than the people they work for, I always want to give them a way to prove their claims.
They claim they can do it. I want to see them try.
Next to go – SAAB, Mitsubishi and Suzuki?
Insightful piece, and very similar to the conclusion that I reached after studying the Daimler-DCX buyout during my MBA studies — MB management does not have a good understanding of the US consumer mass market, and is too heavyhanded (i.e. Cherman) to hire the right US-based management team that could figure out how to reach that market.
Synergy-based deals don’t generally work in any business, because the only path to growth over the long run is to increase sales volume and gain market share. The pursuit of efficiency often ends up costing companies money, as that often entails a fixation on cost cutting for the sake of it, rather than fulfilling demand and building markets as is needed if a firm is to go the distance. The cost cuts are rarely enough to accomplish much, while the products become lackluster enough that consumers don’t want them.
The Big 2.5 have the same basic problem — uncompetitive products. Blaming the Asians, the UAW, the value of the dollar, the price of pork bellies, etc., etc., etc. are all just a great way to avoid placing the responsibility where it belongs — on the shoulders of management.
When DCX builds a car that fulfills consumer demand, such as the 300, it does well with it and prospers. That’s all well and good, but you can’t win a game based upon the strength of just one player. The lineup needs to be solid, across the board.
I would find in EXTREMELY ironic if Mitsubishi (shoved unceramoniously aside by DCX and left to die on the side of the road) out-lasted Chrysler-Dodge, which I think DCX is going to dump. But what will they call themselves, Daimler-Jeep Craporation? Nah, heil-klop (British folks will get the joke) it’ll be DAIMLER-BENZ again with Jeep Corporation as a wholly owned subsidiary.
Wonder if the Chinese will scrap over Chrysler-Dodge the way they did over MG-Rover? From where I was sitting, it looked like two mongrels fighting over a scrap of rotten beef. One (SAIC) got the bone and the other (Nanjing) got the meat.
Isn’t it an interesting thing to look back and realize that EVERY company involved with JEEP has DIED OUT or been bought up and didn’t survive in it’s original form? If you were one to look for trends, you might even see one…
Willys-Overland R.I.P. 1953.
Kaiser-Jeep R.I.P. 1970.
American Motors Corporation R.I.P. 1987.
Chrysler Corporation R.I.P. 1999.
Daimler-Chrysler, or Daimler-Benz R.I.P. 2007? 2008?
Another thought on chrysler, they are america’s boom bust domestic. Let’s see up in the 30’s and 40’s, down in the 50’s and early 60’s up in the mid 60’s down in the 70’s up in the 80’s down in the late 80’s and early 90’s up in the mid 90’s and 2000 down in mid 2000’s. With chrysler trying to cover all the pieces in the chess game against ford and gm, they are always stretched thin. They seemed to be the most focused when Iacocca had the venerable K car made into everything from the little aries up to a stretch chrysler limo. All done with fours, turbo fours, and mitsubishi six’s. No v8’s need apply, and the fuel thing was their property. It was one thing to have the japanese go to the head of the class (especialy when Iacocca said if they want to compete in the USA they should build here, watch what you wish for Lee) I don’t think any of the American mfgs. thought the Koreans would replace the Japanese at the bottom of the price barrel. And then within ten years to be winning awards for quality minivans and sedans.Just when chrysler trashes the 7/70 warranty the Koreans trump everyone with 10/100. Plus they too can build modern american plants without the UAW. As the Koreans are ready to leave the bottom price niche, the Chinese are tooling up to take that bottom rung. Now I ask, how much of this can go on before we have no American big three left?
You would think MB learned something from the BMW fiasco. Guess not. That German ego got in the way. You should also write a article on how the takeover affected Mitsubishi.
Andrew, generally a good article but your characterizing Chyrsler as a company with “shrunken market share”, and “profits depending on a few up-market vehicles” is incorrect.
Business 101 – When is the best time for one company to buy another one? When it’s weak and unable to fend for itself or when it is doing well? Chrysler was in the dumps in the late 70’s early 80’s and the early 90’s (really 89-92). NO ONE wanted to buy them at the time. And can you blame them? Why buy troble and heartache?
In 1998 (the year of the “merger of equals”) Chrysler was on a roll. They had Jeep going great guns – new Wrangler, Cherokee (’96), new Grand in the pipeline (for ’99), Dodge had the sucessful LH (new for ’98), the first gen Stratus (MT Car of the year ’95 (sister car Cirrus)), the highly successful Ram (1993 Ram – 80,000 plus sales, new Ram for 1994 – 400,000 (!!!) sales almost every year since then), the market dominating Caravan (MT COTY for ’96), the segment busting Dakota (all new for ’97 – the “baby Ram”), with the new Durango coming out in 98 (yes I know – it’s an “evil” SUV but in the late 90’s they sold as many as they could make). They were developing cars faster than Ford (no surprise there, Ford is slower than a tortoise when it comes to developing new vehicles), faster than GM, and maybe faster than some of the Japanese, thanks to using Honda’s methodology of developing new models. And they had 10 Billion dollars in the bank to get them thru the next downturn in the economy that would inevitably come so that they could keep developing new models to be ready when the economy rebounded. Chrysler had gone from a big fat zero in Europe to selling over 200,000 cars and Jeeps in the late 90’s.
That’s why Daimler bought them. Chyrsler was doing great, not on life support, and Daimler wanted a piece of the mass market. Then what happened? Well the “merger of equals” became the takeover and the brain trust that remade Chrysler into the successful company that Daimler coveted left – Gale, Castaing, Lutz, and Eaton – well we won’t talk about Eaton. Others were forced out, like Stallkamp. Chyrsler’s supplier system, the “American Keiretsu” as one magazine called it was tossed and the old adversarial ways of doing business were reinstated. And the 10 Billion dollars went down a rat hole.
Then Dr. Z was sent to “save” the company. He borrowed some old Mercedes components made a 2 or 3 new vehicles, and shepherded some in house redesigns (Ram, Grand Cherokee) and was hailed a savior. He also saw the development of the ME412 concept car that kicked the Merceds SLR’s ass from here to Stugart and back, but Daimler wouldn’t let Mopar build it. Rumor is that he got yelled at for letting a bunch ignorant ‘Mericans build a better supercar for less money than the Deutsche Leute.
Chrylser could be an independant company again. We’re talking about a company that sells over 2 million vehicles a year worldwide. But it won’t make it without the kind of executives that were there in the 90’s. Does Chrysler have anyone like them now? I don’t know.
As I recall, Mercedes wanted Chrysler for their CAD design system, Jeep and extra US plant capacity. Truly, it seems like everything that could go wrong, has.
Analogies are a better tool for selling an idea than they are for doing deep analysis of a situation. The Chrysler and Rover circumstances have little in common beyond the face-facts.
It seems that the main problem here is that Daimler management has completely screwed up in it’s management of Chrysler. They pretty much tossed all of the old guard out and replaced them with good loyal home boys at the top. These Daimler appointed guys have done a horrible job, pure and simple.
I’m curious as to why Dederer describes Subaru as a
”niche” company that sells cars at premium prices.
My Forester wasn’t pricey at all.
HawaiiJim: That’s mostly (Subaru’s) wishful thinking. They are a niche inasmuch as all their vehicles sold in the US are all wheel drive (a legitimate niche); and they would like to increasingly be seen as a “premium” brand. I would say they’ve made a little progress in that direction, despite their prices staying fairly reasonable. The market won’t let them move up too quickly.
jthorner: Analogies are a better tool for selling an idea than they are for doing deep analysis of a situation. The Chrysler and Rover circumstances have little in common beyond the face-facts.
Analogies aren’t meant to serve as perfect comparisons, but to provide some basis to illustrate basic commonalities among different situations. Here, the Rover-BMW analogy is effective in that it illustrates another example of a niche marketer failing to possess the skills necessary to lead the turnaround of a mass-market products company.
All roads lead to product, and Daimler has done a sluggish job of helping its now-not-so-new mass market brands to gain traction as they should have. Daimler has had a couple of product cycles to let Chrysler-Dodge strut its stuff, and the result has been a mixed bag at best.
Admittedly, Rover’s circumstances were more difficult, as its basic brand was in much worse shape, probably well beyond redemption for anyone to rescue. But the same question comes to mind in both cases — what types of skills or advantages did these management teams believe that they had in their toolkits that justified their leadership of these acquisitions?
Just as you wouldn’t expect a Cordon Bleu chef to do a bang-up job of running your local burger stand, I wouldn’t necessarily expect a producer of high-end German luxury sedans to understand how to bring a top-notch middle-class American sedan to market. It might work, but the skills aren’t always transferable.
… BMW analogy is effective in that it illustrates another example of a niche marketer failing to possess the skills necessary to lead the turnaround of a mass-market products company.
At the time of the merger (1998) Chrysler was a profitable company with a popular product line, complete dominance in a fast growing segment (mini-vans), and with the best truck sales it had enjoyed in ages. This was not a turnaround situation. Only in retrospect is it being called thus. At the time of the merger the story was that this was the combination of two already strong companies into one even stronger company. The fact is that the Germans turned the merger into an acquisition and then proceeded to completely loose the melody.
Somehow it has become popular to recast this history as Daimler trying to save, or turn around, a struggling Chrysler. Clearly such was the case with BMW’s purchase of Rover, but that is not at all how the situation was viewed at the time of the Chrysler-Daimler merger of equals. Personally I doubt that Daimler’s executives had the intellectual or emotional ability to actually merge with another company and to honestly adopt the best of each corporate culture and capabilities. They did the Father Knows Best thing and are now caught with their lederhosen down!
Finally, Daimler-Benz is not a niche marketer. In most car markets they are a volume player, and in heavy duty trucks where they are the biggest in the world. Interestingly nothing has been said about the Daimler takeover of Freightliner and other US large truck brands which for the most part has been a success. It would be interesting to find out what was done differently between the Freightliner and Chrysler acquisitions.
Mercedes-Benz’s luxury positioning in the USA is primarily a consequence of the marketing efforts of their US importer in the 1960s as they struggled to find a niche to fill in the highly competitive US market. In Germany Daimler-Benz is the largest industrial company in the country. Hardly a niche player!
Whatever DCX does will be interpreted negatively. Give Chrysler some Mercedes platforms? That will destroy Mercedes! Keep those platforms for themselves? That will kill Chrysler!
What everybody has to realize is that Mercedes cannot do anymore than giving Chrysler some dated parts after they are amortized. Everything else would hurt the Mercedes brand and raise Chrysler prices at the same time.
Dr. Z has done a great job when he was at Chrysler but I have the feeling that LaSorda just stopped there and didn’t follow the path that Zetsche began to walk. But in this business you can’t ever stop and rest on your laurels.
At the risk of imperiling my rep as an enemy of cross brand confusion, I see no reason why Mercedes couldn’t or shouldn’t give Chrysler it’s best engineering.
That strategy would free the American automaker to position itself as the style leader. (That’s what I thought was happening/was going to happen with the 300 triplets.) It would also free Mercedes to keep its German taxi models OUT of America, to maintain and reaffirm Merc’s premium product position stateside. They could go further upmarket.
To those who say that a Chrysler with Mercedes underpinnings and engines will drag down Mercedes, well, what the Hell was the point of the merger then?
I have been a long time ChryslerCo fan for a number of years owning a number of different models throughout the 80s and 90s and currently my wife drives a Durango. It seems to be that they have a few flawed ideas and they are not a company that learns from their successes but always seem to take one step foward and two steps back. The 300C forward, the Sebring, Caliber, Compass, two steps back. I don't know how the Nitro is doing and I really don't understand the position of the soon to be Patriot. Jeep should have been taken upscale instead of this downhill push they are in now, the Commander should have been the next Grand Cherokee, and the Patiot the next Liberty. I'm rambling on here but I just don't know what to think of my former favorite car company anymore. BTW I now drive an Audi.
Robert, About the reason why Daimler took over Chrysler:
The main reason was that Daimler, unlike any other German brand didn’t have the backing of the State or a big family. Porsche is owned by the Porsche/Piech family, BMW by the Quandt family and Volkswagen used to be protected by some strange law, basically giving the State of Lower Saxony most of the power.
Daimler however has always been vulnerable and on top of that, the Deutsche Bank, long time majority shareholder of Daimler, announced that it was willing to get rid of its Daimler shares. So in the mid 1990s when everybody was saying that by 2010 there will only be like 4-5 giant car manufacturers left, Daimler felt that in order to survive it had to merge with another big one.
Obviously it could only be a complimentary company that doesn’t sell luxury cars, but mass market vehicles. The internal Daimler task force soon identified Honda as the perfect partner as it was present and strong on every market. Unfortunately for Daimler, Honda had no interests whatsoever. Next on the list was Chrysler in front of Ford.
Incidentally, while Daimler started talks with Chrysler, Ford approached Daimler for the same reason. They had come up with pretty much the same reasoning as Daimler. But those talks failed because the Ford family wouldn’t agree to a merger of equals (funny ain’t it?). They wouldn’t agree to anything but a takeover. (So after those talkes failed, Ford was fast to get hold of Volvo and Land Rover…we all know how that PAG worked out.)
The only problem with Chrysler was that it was limeted to North America. So Daimler also started their involvement with Mitsubishi and Hyundai.
Now, that was the reason for the involvement. Obviously it didn’t work out that way. Today, DCX is worth less than Daimler-Benz before the merger, Deutsche Bank’s stake in DCX is getting smaller all the time and DCX is more vulnerable than ever. It would be the perfect victim for Raiders since DCX would surely be worth more if it was split up again.
Today, DCX got rid of Schrempp, the dreamer who envisioned the so called World inc. and who started all merging. Instead, Zetsche is known for being pragmatic. He showed it at the commercial truck division as well as at Chrysler and he was also one of those who were responsible for leaving Mitsubishi (Schrempp did everything to keep Mitsu but had to give in in order to keep his job). So I’m sure, if Chrysler doesn’t get out of its hole, Dr Z will split it off, rip it apart and shut down or sell off the unprofitable parts. The UAW should better look out, cause as nice as Dr Z can be, you better don’t f*** with him.
Also Robert, on your platform strategy:
Mercedes doesn’t have any platforms to give Chrysler. Mercedes only has very up-market parts (that’s exactly the reason for the merger: Because their line-up is complementary)
So if Chrysler would get a new Mercedes platform, it would immediately be too expensive (Crossfire, anyone?). Even the cheapest C-Class would be too expensive for a Sebring. The 300 worked because the parts already brought DCX enough money to cover their R&D costs and hence were cheap enough.
jthorner: Somehow it has become popular to recast this history as Daimler trying to save, or turn around, a struggling Chrysler.
I’m not seeing that. I see Chrysler-Plymouth-Dodge as being the bubblegum band that has been selling the occasional hit single in a world in which you need to sell albums if you want to hit the big time. The company has long struggled to turn its occasional one-hit-wonder into brand momentum that translates across the entirety of the line. That’s what Daimler should have remedied, and has failed to remedy (although I will give credit where it is due for killing off Plymouth, a smart move on their part.)
Let’s remember that GM and Ford were also profitable, yet now they are not. Same basic problem — their previous successes were too heavily rooted in a small portion of their overall lineup, while the companies had basic organizational problems (too many dealers, inflexible plants, no rational long-term plan) that were being disguised by the fixation on quarterly earnings.
Finally, Daimler-Benz is not a niche marketer. In most car markets they are a volume player, and in heavy duty trucks where they are the biggest in the world.
At that point, Daimler had little experience in producing entry-level cars (and the A-class would indicate that it isn’t particularly good at it), and much of its focus has been on commercial vehicles and the higher end of the car market, even in Europe. It has traditionally left the bread-and-butter European segments to VW, FIAT, Opel-Vauxhall (GM), Renault and Ford, much as it has in the US, but has also dialed in its share of heavy trucks, buses, etc. into the mix outside of the US market.
It should be pretty clear that its purchase (let’s not call it a merger, as that implies some level of equality that has not been present here) of Chrysler was a branding play, meant to expand its market reach into mass-consumer segments where it has had little presence in Europe and no presence whatsover Stateside. That’s the common thread with Rover, and has been subject to some of the very same problems. Mergers generally don’t work in any industry, so it’s not surprising to see that this one hasn’t been a hit, although it has produced some benefits that could be leveraged with the right leadership in place.
windswords:
Business 101 – When is the best time for one company to buy another one? When it’s weak and unable to fend for itself or when it is doing well? Chrysler was in the dumps in the late 70’s early 80’s and the early 90’s (really 89-92). NO ONE wanted to buy them at the time. And can you blame them? Why buy troble and heartache?
Um, actually that’s completely wrong. When is the best time to buy a company? When it’s weak? OF COURSE THAT’S THE BEST TIME. That’s one of the main reasons for buyouts…to buy a company when it’s weak, knowing it’s potential, so you can make a cheap investment that has great returns for your shareholders.
I work in M&A, and the first rule, when I assess a company, is to determine how long it will take for us to pay off that investment with the new company’s profits. If a company has piss poor profits, but we see a number of areas which we can immediately improve, then that looks like a steal.
The biggest mistake, and the one most commonly made by novices in the mergers & acquisitions segment, is to think that you should buy a company when it’s on top of the world. When you do that, you often end of overpaying for the company, and then when the company can’t live up to its own standards, you ruin it by cotting costs because you have to justify the purchase price you paid.
Daimler’s biggest mistake was that they bought something completely different than what they thought they were buying. And, they bought it at the worst possible time…
I work in M&A, and the first rule, when I assess a company, is to determine how long it will take for us to pay off that investment with the new company’s profits.
Studies indicate that anywhere from about half to two-thirds of M&A deals fail, i.e. they dilute the overall value of the firms involved. Unless you’re an investment banker who profits from putting the deal together, and who gets paid whether or not it works, mergers are generally destroyers of value, not creators of it.
Buying a firm at the top of its game can be acceptable if you want an assured but low return on your investment. Buying a troubled firm is foolish, unless as the acquirer, you have something to contribute beyond money that can fix what’s broken. Most likely, that is going to require a new management team.
The best M&A play for a turnaround situation is to buy a company with some strong brands but bad management. Brands help to create the revenue, while removing the bad managers can help to channel those revenues to more profitable uses.
Consistently, the biggest M&A mistakes seem to result from acquisitions that are centered around the premise of cost cutting, rather than increasing top-line revenues. Cost cutting doesn’t get one very far, and it certainly doesn’t necessarily help to convince customers that you offer a good home for their dollars to be spent. If you buy a mass-market company with a massive fixed-cost infrastructure and you can’t figure out how to build long-term market share, then you’re dead before you’ve started. Daimler should have found some good management talent that understood the American consumer if they wanted to run an American company.
The problem with selling Chrysler is that no one would buy it. Chrysler will need to be sun off as it’s own company to live or die as it wills. Benz would be smart to keep Jeep and then let the Compass die in a few years. Like BMW has Mini.
i wish the american companies would put as much time and effort into little cars as they do big ones.
These aren’t the hardest of times for Chrysler. Compared to 90% of their history, they are financially on Easy Street! This was a company that was close to 180 days in arrears on its accounts when the first Chrysler Six came out – it nearly bankrupted Walter Chrysler many times.
Chrysler has had to be bailed out by the profits from Jeeps, war contracts, and K-Cars. They’ve gotten guaranteed loans from the government when no bank would even look at them. They have never, ever been on a firm footing of their own. Yet for eighty years they’ve survived and thrived.
If Daimler throws them out, they’ll take enough cash with them to stay viable, and they cannot possibly lose enough money to sink Daimler-Benz – the German government wouldn’t let that happen!
Pch101:
December 15th, 2006 at 10:50 am
I see Chrysler-Plymouth-Dodge as being the bubblegum band that has been selling the occasional hit single in a world in which you need to sell albums if you want to hit the big time. The company has long struggled to turn its occasional one-hit-wonder into brand momentum that translates across the entirety of the line.
Sorry this is just not true. When Daimler took over Chrysler they were making money on every vehicle they made, even the entry level Neon. They were not a one hit wonder. That may have been true for the old Chrysler but not the one that was taken over in the late ’90’s. Also Plymouth may have gotten axed by the old maagement before Daimler established control, I would have to research that, but I don’t think it was an oder from Schremp or Stugart.
audimination:
I have to disagree. Mangement actually thought of merging selling to someone in the early ’90’s (when the press was saying nothing but doom and gloom for Mopar) but nobody was interested. You don’t buy a sick company UNLESS you think you can turn it around or sell parts of it off. You do buy healthy companies or companies that are on the way back (especially if the stock price has not caught up with reality yet).
I work for a company that has just exited chapter 11. Nobody was interested in us during that time or right before we filed. Now that we are on the way to being profitable again I expect someone to express an interest in us.
Anyway the point is Chrysler was not in trouble but doing quite well when Daimler took over.
Pardon if these matters have already been the subject of previous posting. Is there a definition of "death" we are working with? Is it filing for Chapter 11 ? or does it need to be Chapter 7? I understand many to be saying its chapter 11. But GM and Ford, even if they survive their cash crunch now and return to profitability, simply buy a ticket to continue playing in a very competitive market. In graphic terms (i.e graphs or plots, not what you're otherwise searching for on the web), plotting cash on the Y axis and time on the x axis, all the 2.5 are plotting nose dives down to the x axis. There's a level on the y axis such as zero or the line of minimum operating cash that if crossed means filing, and adult supervison takes over (bankruptcy court). Many talk about the big 2.5 being able to return to profitability before the money runs out. That would represent the plot showing pulling out of the nose dive and leveling off just above the minimum operating cash line. (Toyota would be stratospheric in comparison). Does anyone think that one of the 2.5 would then gain altitude (increased cash reserves/profitability)? Or will they just continue flying close to the ground until some downdraft pushes them to intersection with the zero dollar line? I take it that being bought out would be death but "merger" would not? Second question : Why are there two deathwatches and one suicide watch. Is there a reason they're not all deathwatches ? Indeed, given DC's "parent" it seems it should be the deathwatch and the fact that the other two made all the decisons internally would merit terming Fords' (sorry, being from Detroit, no one refers to it as Ford) and Gm's condition more properly suicide? Again, apologize if this has already been covered.
I don’t see how offering “Chrysler” obsolete MB platforms hurts MB. It saves “Chrysler” a billion that would otherwise have to be spent on R&D for a platform and allows DC to devote development funds to drivetrain and more importantly, to sheetmetal design. MB image would not suffer because its “obsolete” by MB standards and MB tells its target market that its new platforms are superior. If DC had to develop the platform, overcautious mgmt would have cut back on risk taking with the result of neither the styling or the mechanicals resulting in something as “new” as the current 300
The company has long struggled to turn its occasional one-hit-wonder into brand momentum that translates across the entirety of the line.
Chrysler was not a one hit wonder when they merged with Daimler. In fact, their products were doing well and making money across the board. The Neon, minivans, cab forward large sedans, Jeeps and pickup trucks were all doing very well indeed. Even the Stratus/Cirrus were doing well and were better than any of the GM or Ford offerings in that class. Chrysler at that point was more on top of it’s game then it had been in decades. Many of the trade rags of the day considered them the best performing US brand.
Daimler didn’t buy a sick company. Daimler and Chrysler were caught up in the get big or die thinking of the day and merged in pursuit of economies of scale. It was all the rage at the time in the US and Europe. In Japan only the weak sisters Nissan, Mazda, Mitsubishi, Isuzu, Suzuki and Subaru played. Of these, two got joined at the hip to US/Euro makers (Nissan-Renault and Mazda-Ford). The others tried joint venture tie-ups of Mitsubishi-DCX and Isuzu, Suzuki and Subaru with GM). The tie-ups have since been untied.
Remember also that at this time GM and Fiat got engaged, if not married. We now know that one ended up in divorce court with GM paying $2B for the right to walk away from the altar. Fiat has been using that $2B to carefully rebuild itself whilst out from under the GM tent.
Interestingly enough, the big market share gainers worldwide are Toyota and Honda and they play the M&A game very little. Toyota does a number of tie-ups and seems to know how to get good things out of those relationships. Honda pretty much sticks to organic growth.
John
By the way, nobody seems to be bothered by the level of platform and component sharing which goes on between Toyota and Lexus, Honda and Acura or Nissan and Infinity!
The fact that a Toyota Tundra can come with a V-8 engine lifted largely from the big Lexus sedan doesn’t seem to stop a single Lexus buyer from laying down the cash.
Vitek:
I’m not an authority on this site, but death in these cases mean Chapter 11. I’m not so sure about the death/suicide issue, but I’d guess that Chrysler was doing fine until recently and all of a sudden seems to do everything wrong it possibly can.
On your second post:
I agree that the best way for DCX is to give Chrysler last generation components or maybe even platforms. They are still good enough to compete in their class as the 300 shows. What I meant is that it’s a bad idea to use the same platforms on Chrysler and Mercedes cars at the same time. This would hurt both. Mercedes would lose appeal and Chrysler would become too expensive.
jthorner, there is absolutely nothing wrong with platform sharing. It’s badge engineering that most folks have a problem with.
No one is deriding Chrysler for platform sharing.
ktm:
Well exactly. While pistonheads are aware what lies beneath a given model, the vast majority of the general public A) doesn’t know and B) doesn’t care. Otherwise, GM would be in worse shape than it is now and Ford’s Lincoln and Mercury division would’ve died years ago.
Again, the simplest way to keep Chrysler and MB from cannibalizing each other’s US sales would be for Chrysler to take the low road and MB to take the high. Done.
FYI Death does indeed equate to Chapter 11– although many writers for this site would insist that Chapter 11 would actually mark Detroit’s rebirth. A new beginning rather than a final end. That remains to be seen.
Also, the reason we opted for a Chrysler Suicide Watch is that the company seems bound and determined to make as many stupid decisions as possible. When we see any evidence that they’re making moves in the right direction, we’ll take them off Suicide Watch and consider whether or not they’ll go on a Death Watch.
Rest assured, I consider these developments depressing stuff all ’round.
jthorner:
“The fact that a Toyota Tundra can come with a V-8 engine lifted largely from the big Lexus sedan doesn’t seem to stop a single Lexus buyer from laying down the cash.”
If I could get a Caliber with the M-B 3.5L engine, it would pose more of a problem because of the M-B branding.
From a Lexus I expect a pampering dealer and zero defects. But I expect a Mercedes to be engineered like no other car in the world. If a Caliber or 300 is engineered just like it, then I have a problem laying down $50-70K for a midsized car.
“No one is deriding Chrysler for platform sharing”
Plenty of folks have derided Mercedes for platform sharing. See the comment about about “engineering like my mother’s minivan”.
Few seem to have trouble with Mercedes stuff flowing into Chryslers, but lots of Mercedes buyers seem offended at the idea of any major things flowing the other way.
Few seem to have trouble with Mercedes stuff flowing into Chryslers, but lots of Mercedes buyers seem offended at the idea of any major things flowing the other way.
That is probably true. And that alone should tell you that Mopar wasn’t exactly a superb branding play for Daimler to acquire.
The key to a strong brand in the auto industry is a name that has continuity and positive recognition, and that can be sold in reasonable quantities without resorting to fleet sales. The fact that DCX felt the need to kill off the Neon nameplate after having used it for only two product cycles, to name just one example, should tell you that it wasn’t a very good brand to begin with. The Big 2.5 might just run out of replacement names for their cars before they run out of money.
The above blogs tell the story of chrysler pretty well. In 1999, mercedes saw chrysler with robust sales, modern products and truly the little engine that could under bob eaton. Eaton, an old gm recycle knew it wasn't sustainable, he further had to know that chrysler's were not well built and had low resale values. Rather than take a chance on another cycle of products which would produce the exact results we are seeing now he bailed the company out. The chrysler stockholders made a bundle not withstanding Kerkorians lawsuit. If that stock were independent today it would be $8.00 next to ford's price. It must have been a huge shock that mercedes found out they would have to share platforms and parts with chrysler. Because chrysler was not self sustaining) For this error, Mr. Shrempf walked the plank two years ago. He was the CEO of mercedes who cut the deal with Eaton. He simply made the mistake of believing that if the stuff chrysler was peddling in the US sold well why worry how bad it was or if chrysler could sustain itself in the future, with new model cycles? I don't think the huge exodus of talent like Bob Lutz from chrysler was just because of new German bosses, they knew there would be few promotions when chrysler hit one of it's endemic speed bumps in the next (read now) product cycle. Whether chrysler was independent or German owned, few promotions and some pink slips were bound to happen.So they blamed mercedes and jumped ship rather than stay around and face the music for the product cycle that chrysler is now in. For all we know, they may have encouraged Eaton to cut the deal to get them all out in time.
Robert Schwartz:
“I have never quite gotten the three pointed star religion. The truth of the matter is that it is only in the US that MB is a luxury car brand. Every where else in the world, you see MB trucks and MB taxis. What does a “C” cost with cloth seats, 2 L – 4cyl engine, 4 speed manual and no radio? $18K?”
I would agree with your comment for the majority of MB cars designed after 1992 or so. My mother purchased a 1997 C230 with few options (4 cyl, MB “Tex” interior, 5 speed auto and sunroof). The cost was $30,200 in 1997. This was the last of the “old school” MB cars designed before they tried to compete with the Japanese and cheapened their product. The car has had taken minor hits at all 4 corners (3 were not her fault, people drove into her, 1 was her fault as she backed into a garbage truck). All accident repair was performed at the local MB dealers paint shop. The car has 90,000 miles on it, the interior shows absolutely zero wear (even though she uses it to cart around grandchildren), has no rattles and absolutely everything operates as new. When I detail it for her, the paint still has a deep shine (even the unrepainted panels). The quality of this car is incredible.
Perhaps that is one reason that taxi drivers in Germany choose it as it is (or was) so well built, that it could take abuse.
“Eaton, an old gm recycle knew it wasn’t sustainable…”
It was entirely sustainable. With the Honda platform teams in place Chrysler was bringing new models to market for less than ANY other major player. And they weren’t making mistakes like Aztek becuase the platform teams had everyone onboard from the get go: designers, engineers, manufacturing, marketing, and more. Chrysler has never been the same since the hostile takeover and it’s current crises is due to another Daimler exec Joe Eberhart.
Once they got the design methodology down (platform teams) and the suplier relations (the “American keiretsu I refered to in an earlier post), I believe that the next major refinement they were going to make under Eaton or under their next CEO, Tom Gale (who I believe was being groomed for the position) was going to be Toyota/Honda quality. Now I’m not saying they were going to equal or better them but Mopar has always had a less than stellar quality reputation (although some of their stuff like the old Torqueflite transmissions were legendary for their reliability) and they next logical thing would have been to make a “great leap forward” in that area. So I don’t believe sustainablity was why Eaton sold out. I think he was in over his head and the 50+ million dollars he made from the deal didn’t hurt either.
windswords, well we agree that it was Eaton and his cohorts that sold chrysler out. It was Eaton who was showcasing chrysler as up for sale. Mercedes didn’t somehow come in the back door and steal a perfectly good company. We also agree that maybe Eaton wasn’t up to the job to hold the progress you say they made. I am not defending mercedes and their management. However, they didn’t initiate the deal they just alllowed themselves to be romanced by the Chrysler top eschelon. And yes, some people on the chrysler side made a lot of money selling out.
Now I’m going to have to watch Death Race 2000 (1975) just to hear him exclaim “Jesus Chrysler!”
The idea that Eaton & Co. pulled the wool over the eyes of the Daimler management doesn’t seem plausible. Warranty claims rates, resale values, product pipeline and such all should have been thoroughly looked at during the due diligence process between the time a letter of intent was signed and the day the deal closed. I’ve been through such a process in much smaller scale deals than that one and I doubt that such easy to verify data was hidden or ignored.