No, we're not talking about Tony Romo and Jessica Simpson's impending breakup. We're quoting directly from the mustachioed horse's mouth. The headline my friends, is none other than Daimler CEO Dieter Zetsche (Dr. Z to you and me) discussing why the 1998 "merger of equals" between Mercedes-Benz and Chrysler failed so miserably. To refresh your memory (in case your life is filled with more interesting activities than watching the disintegration of poorly planned global corporations)… Daimler sold Chrysler for billions and billions less than they paid for it to a hedge fund last year. Our favorite David Cross-lookalike CEO was speaking to gathered business leaders at a symposium about "Global Capitalism, Local Values" trying to explain exactly what went so badly. He points to the level of cooperation between MB and Chrysler as being "less" than he would have liked. Dr. Z goes on to say that Daimler learned a valuable lesson. "It's fair to say that we overestimated the potential of passing leading-edge technology from Mercedes-Benz to Chrysler. Unlike premium brand customers, American volume brand customers are far too price-sensitive to absorb its cost." To which TTAC says, "Duh!" And of course, know thy brand.
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Passing on less-than-leading-edge technology seems to have worked for the 300/Charger platform.
Perhaps we’re looking at management failure rather than market forces?
So Dr. Z believes that European volume brand customers are NOT price-sensitive to absorbing unnecessary costs? I’m sure Citroen and Renault would set him straight…
And what “leading-edge” technology did MB give to Chrysler? An old model E-series platform for the 300? An old model CLK platform for the Crossfire?
@Mj0lnir:
Did it work? Neither of those cars sells that well – compare them to say the Chevy Impala. And they had to decontent the 300 and Charger to get their prices down. No side torso airbags available, curtain side airbags were only an option, 4 speed auto transmissions on all but the Hemi engines, cheap interiors…
That said they are quite good to drive.
Translation: Chrysler customers want a Chrysler, not a Mercedes. (Which is why they’re Chrysler customers and not Mercedes customers.)
For the price of a phone call I could have told this to Dieter. Mercedes Benz would have saved several billion dollars.
Unlike premium brand customers, American volume brand customers are far too price-sensitive to absorb its cost.”
I.e. we can swindle premium brand customers because they have enough money not to care that our option prices are just completely ridiculous.
After all, we can charge more for a nav system than the cost of a brand new computer.
Daimler only sucked money out of Chrysler during the heady years of the early 2000’s and pumped little back in. They eventually reaped what they sowed: a whole lot of nothing.
hahaha oh man, I can’t believe I never made the Dieter Zetsche-Tobias Funke connection before.
@ Justin- good point. Once the initial bloom faded they became mid-pack at best.
I don’t think that’s the fault of an expensive second-hand Daimler chassis. Unless, of course, the cost of sliding it under american styling caused the interior cost cutting that really kills those cars.
But yeah, they really aren’t great sellers are they?
MBZ executives got American-style pay packages and Chrysler executives got free luxury company cars. Seems to have worked out well for the executive team.
Customer didn’t fair as well as the execs, though. Seems like MBZ vehicles received reduced engineering/durability/quality (at least relative to the competition) with ever-accelerating MBZ prices.
Funny how time clouds one’s memory. Back when they “merged” the main objectives cited for Daimler were the Jeep brand, excess Stateside plant capacity, and a superior CAD system that Mopar had.
When the “merge of equals” was announced, a car guy buddy and I were in his garage (ironically, doing yet another repair on his mother’s Dodge Shadow) and were apalled by the whole idea.
He’s lived in Germany, in Stuttgart, and I think had some kind of handle on the arrogance thing that they have over there.
His (and my) take was that the resulting company would take the styling of Mercedes (zilch) and the quality control of Chrysler (crap) add to cost cutting (liberal doses) and top with German arrogance, and presto!
You have a disaster company with all the worst attributes of both! He also agreed with me that before 10 minutes passed, the Germans would simply take control.
We were right.
It wasn’t a brand problem. It was a management and culture problem.
Any good books on they mess they made yet?
Funny how quality never really take top billing with any of these car companies having troubles…
They offer all the marketing gimmicks but never the durability to enable a majority of the vehicles to make it to 200K miles.
Is it really the car or the customer… What do you think…
its really sad when you think about it.Chrysler was doing alright,had great designers and (when they sorted out the quality issue) pretty neat cars!
no other American manufacturer offered us so many amazing new concepts that actually went into production!!!think about that!
and then came m-b
what a horrible waste of one of the few..if any INTERESTING mas-production car companies in the WORLD
over time all of us enthusiats will lament the loss.
just my 2 cents
How is it that so many car enthusiasts thought the merger was a bad idea, yet nobody at Daimler-Benz or Chrysler thought so?
I still think the 300 and Charger were a good MCE away from remaining competent past their “grace period”, if you will. I believe the 5-speed that ChryCo used to use was a Merc unit, so they’d have to pay royalties now. Fat chance, thanks to who owns them now.
I don’t think Mercedes ever realized how competitive things were between the mainstream brands. They never seemed to move that quickly, especially when it came to powertrains.
Don’t forget that Chryslers 90’s “Dream team” of leadership all hit the road in the first couple years after the “merger of equals”. And those put in charge after them were in way over their collective heads.
Didn’t Daimler also change software packages halfway through the development of the current product generation at Chrysler?
Seems I’ve heard that is why there’s a warmed-over Mitsu platform under everything that isn’t a truck or old MB tech– They scrapped the original designs and software, and had Chrysler start over.
Idiot. There was never any cooperation between them. None. Zip, zero, nada.
If there had been, if Dumbler had a more open minded, all kind of good things could have happened. But it didn’t. Absolute worst company to be bought out by. They never asked, what’s Chrylser got that we could use/learn from? They never asked, what do we have that could help Chrysler? Instead they gave them a prev gen E class platform (that they charged royalties for I’m sure) even though Chrysler was well on it’s way with it’s own RWD platform (and thereby delaying the intro of the 300 and Charger by 1.5 years).
At one time (pre Dumbler), Chrysler was one of the quickest to market automakers. They studied what Honda did to develope new models, combined that with lessons learned from their aquisition of AMC/Jeep and created platform teams that handled everything in developing a new vehicle. And mgt was not allowed to interfere and gum up the works. The result was cars developed faster for less cost. At one point I think they developed a car from scratch in 42 months. That’s the real reason they made so much money in the 90’s. The sales were very good, but the cost savings from their development process saved them big time $$.
Of course Dumbler, instead of adapting it for Mercedes use, replaced it with their process and forced Chrysler to use Mercedes parts and consultants – for a fee of course. Could you imagine developing a new Mercedes for 10, 20, or even 30% cheaper than before but selling it for the same or more? They would be swimming in Euros right now.