Daimler and Chrysler Merger: What Went Wrong?

Date 2007/4/12 7:38:00 | Topic: Miscellaneous

The Chicago Tribune has a fascinating article looking back to the merger of Daimler AG and Chrysler Group. Using 20/20 hindsight, the author of the article uncovers some clues that should have sent up some red flags.
"The Germans had no desire to work with the blue-collar American company and share things. The feeling of the Germans was that if you mix clean water with dirty water, you get dirtier water."

Indeed, part of Toyota Motor Co.'s success is its Lexus luxury brand shares vehicle platforms and components with the Toyota brand, lowering development costs and raising the quality of both. For example, the best-selling Lexus model, the ES 350, is derived from the Toyota Camry, and the two cars were designed simultaneously.

In contrast, Mercedes-Benz, the flagship brand of the company, kept its vehicle development largely separate from Chrysler's, and the two shared only parts, not designs.

"They just let Chrysler pretty much run as Chrysler," said Mike Parker, a skilled trades worker at Chrysler's Sterling Heights, Mich., plant. "There was very little difference in the plant (after the merger). In general, people in the know said there wasn't as much integration as they expected."

The most visible change on the assembly line was that more equipment, such as robots and conveyors, came from German-based companies.

"I don't think Daimler did good due diligence in the beginning or it would have seen that Chrysler's cycle plan was sparse on new product except for the [Chrysler 300] rear-drive sedan," said George Peterson, president of industry forecaster AutoPacific.

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