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So, too, should Mr. That won't happen, and Mr. Schrempp had to eat his own forecast in July. And it should now be apparent to Wall Street that in the case of DaimlerChrysler, the tail is wagging the dog. Indeed, there is some validity to Mr. Hall's contention. From DaimlerChrysler's inception, both the financial community and the American press have taken a parochial view of what is, at present, a global holding company, says Mr.

American reaction to the reorganization was as if Mr. Stallkamp was the only one shown the door. Four German senior executives have or are about to retire and five more were either promoted to, or took over, larger sales and marketing organizations in various countries. There were very few reports of what it all means. Schrempp has empowered younger, more aggressive line managers, as he has reshaped DaimlerChrysler's management board to meet his expectations. Holden told the communications staff that he didn't know whether Tom Gale, head of product development at Chrysler, Plymouth, Jeep and Dodge, would leave the company because he is close to retirement age.

Gale, who heads the new automotive council, is just Holden told the staff that Mr. Sidlik was puzzled by the rumors since there were people at Ford who hated him when he left. Holden quoted Mr. Sidlik as saying. Sidlik left Ford's car product development department in the comptrollers office nearly two decades ago and joined Chrysler in as a car product financial analyst. While the rumor machine was running amok at the former Chrysler Corp. Nevertheless, Mr.

Jackson's decision to depart and become president and CEO of AutoNation, leaves Mercedes-Benz without the two men who forged a new image for the luxury brand and doubled its U. It is now up to Paul Halata, who replaced Mr. Jackson in the shakeup, to continue the sales momentum in Mercedes-Benz's most important export market. The people who were responsible for implementing the changes at Mercedes-Benz "are still here. Halata will let them continue to do their jobs.

The Merger Behind Daimler Benz And Chrysler Finance Essay

As Mr. Schrempp molds DaimlerChrysler into a contiguous, global automotive manufacturer, Chrysler's influence will be most felt beneath the skin of the company because of its sourcing and manufacturing efficiencies. Daimler will dominate the more public parts of the company, especially sales, marketing and distribution outside of the U. There also is precedent to ignore certain pronouncements made by DaimlerChrysler executives in the future.

They called their corporate marriage a merger, it is not. But by other measures, the merger has fallen far short of its designers' vision.

How Daimler, Chrysler Merger Failed

In fact, it is now acknowledged by people such as Mr Hubbert that Daimler, seeking to solve strategic problems of its own, had engineered a friendly takeover of America's third car maker. Two years on, problems abound. Some are financial. DaimlerChrysler has abandoned detailed discussion of the cost-saving targets it set for the new company, even though investors remain intensely interested.

But the group has admitted that renewed and deep cost-cutting efforts have had to be undertaken to shore up the group's operating results.

DaimlerChrysler "merger" lawsuit continues

But it also said that it was struggling to meet earlier projections of operating performance for the full financial year. And, tellingly, Mr Schrempp said the group urgently needed to improve its efforts to communicate its story to investors. The stockmarket, at least, seems sceptical about the prospects for the merger. Other problems are operational.

Rumblings of discontent within the firm can still be heard. Competition in the car market is intensifying, especially in Chrysler's home market and in the high-margin minivan sector that it has long dominated. As competitors such as Honda of Japan have produced their own vans, Chrysler's efforts to hang on to market share have consisted largely of giving ever bigger discounts to dealers.


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A few vehicles, notably the retro-styled PT Cruiser, have been successes, but the firm's main roll-out of new models is still several months away. Even the deal with Mitsubishi is an admission that the transatlantic marriage was not enough: it united two complementary sets of products in America and Europe, but failed to remedy the weakness of both companies in the faster-growing Asian and Latin American markets.

Eighteen months ago, Mr Schrempp wanted to invest in Nissan as an answer to Daimler's Asian shortcomings. But he was overruled by his management board, which decided that Daimler could not digest two big acquisitions at once.

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To the surprise of Renault, the rival bidder, Daimler walked away from a deal that would have made its reach global in a way that its takeover of Chrysler has not. Yet, despite these problems, it is too early to conclude that the merger has failed.

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Its true test will come in the next two or three years, when the first products developed entirely since the merger should start to roll off the production lines. If DaimlerChrysler can show that it has translated operational efficiency into successful new cars and higher levels of profit, it will have proved that the deal's underlying logic was sound.

Even at this early stage, however, the merger offers some powerful lessons in the problems of combining firms in different countries. The business background to the deal shows why both companies were willing to take on such problems. By the mids Chrysler had survived near bankruptcy and a failed hostile buy-out launched by Kirk Kerkorian, a corporate raider who was its biggest single shareholder. Chrysler was lean and had trendy designs, but where was it going?

Its advisers, Credit Suisse First Boston, prepared a paper outlining six strategic options. According to a recent book by two Detroit News journalists, they all consisted of some form of alliance with the Germans see article. Desultory talks had taken place between the two companies in But Bob Eaton, Chrysler's chairman, believed that sooner or later he would have to throw in his lot with another car company.

So when, in , Mr Schrempp sought to reopen talks with Chrysler, he got a friendly reception. Not that everything was friendly thereafter. In particular, Mr Eaton took plenty of personal flak after he announced that he intended to stand down as co-chief executive within three years. Yet, judging by DaimlerChrysler's performance since the merger, Mr Eaton may deserve more credit for strategic insight than he has had.

In return for accepting junior status in the merger, he obtained a big premium for Chrysler shareholders. Had it remained independent, Chrysler would be in a horrid position today. Even so, the merger could have been better handled. By focusing on general issues rather than cross-border ones, the two companies underestimated a factor that would define, and could even scupper, the entire deal.

Throughout the negotiations, even after integration began, cross-border problems surfaced, demanding attention. But top managers on both sides seemed to prefer sidling up to potential hurdles rather than meeting them head on. The following day — 20 years ago today — the deal was announced, or more like proclaimed, at a hastily called yet flawlessly organized press conference at the London Arena, where security guards wore matching bronze jackets, waiters circulated with trays of canapes and fruit punch, and Chrysler Corp.

CEO Bob Eaton never once stopped smiling.

The DaimlerChrysler Merger: Why Didn't It Succeed?

Whatever kind of deal it was, a merger or takeover or just a jamming together of two giant companies, it was beyond historic. It was apocalyptic. We sat in thrall at this union that had not been rumored or speculated and yet was suddenly upon us. I watched as Eaton, on stage, called it a "merger of equals. The fact that it was Eaton who first used the term that day — with a rather insistent tone — seemed significant. Daimler-Benz chief Juergen Schrempp, Eaton's new co-chairman, merely nodded.


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  • Then Eaton — whom I'd known and admired when he headed General Motors Europe before going to Chrysler in — said something else I'd never heard before. He announced he would retire within three years, which sounded to me as though Schrempp and Eaton would never be co-anything. Not really. Ahead of the press conference, Diem, managing editor of Automotive News Europe , surmised that the new company would be named "Chrysler-Benz.

    He seemed ready to call the idea in to Stuttgart and Auburn Hills just in case they hadn't thought of it. But when the three of us arrived at the London Arena, "DaimlerChrysler" was emblazoned on everything in sight. Yet Bill was onto something. The top Chrysler guys had insisted on a name that was more or less what he had reckoned — and when they didn't get it, or rather when Eaton didn't get it for them, it was an early sign that the deal was doomed. Most of us know the sad story of DaimlerChrysler. It was the culture clash heard 'round the world. The damage is still being assessed, the lessons still being absorbed.

    His successor, Jim Holden, was in the job just 13 months. In , DaimlerChrysler was dissolved and the Chrysler part sold to the private equity group Cerberus — a sad conclusion to what began as a great spectacle. Here is the story straight from the mouths of those who lived it.


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