Daimler Crysler Case
Question 1
What were your expectations (prior to the developments in 2007) of the DaimlerChrysler merger and its future prospects in the global auto industry?
Initially, at the time of the merger there were many aspects in favor of the DaimlerChrysler merger, such as:
• Chrysler gains a toehold in Europe, access to Daimler’s technology base and get an image boost from Mercedes.
• Daimler should benefit from Chrysler’s strong U.S. presence, design flair and manufacturing process that have made it the world leader in profit-per-vehicle.
• Future products could be derived off common platforms–the chassis that forms a car’s foundation–and share major components. Mercedes, for instance, might develop a luxury pickup truck based on a Chrysler platform at a much lower cost than it could otherwise.
• By teaming up with Daimler, Chrysler will gain greater access to the European market where Mercedes has more than 1,000 dealers. Chrysler has only 1% of the European market, compared to 12% each for GM and Ford.
• The merger may also help Chrysler overcome the problem that has dogged it in recent years–quality. The company gets high grades for design, production and profitability, but still lags its domestic and Japanese rivals on quality ratings.
Though, after the honeymoon DaimlerChrysler encountered a multitude of problems concerning compatibility and industry influences. In my opinion these problems could have been solved if the management would have been capable and trained. It could be expected that the sheer sizes of the undertaking made the merger complicated and take years to complete. The different cultures–Mercedes more conservative and stolid, Chrysler more freewheeling and dynamic–would be problematic to integrate. When Chrysler bought American Motors Corp. from Renault in the 1980s, many of Chrysler’s old-line executives resented ideas presented by AMC’s French managers. Also, a merger between Volvo and Renault collapse in 1994 because of culture
What were your expectations (prior to the developments in 2007) of the DaimlerChrysler merger and its future prospects in the global auto industry?
Initially, at the time of the merger there were many aspects in favor of the DaimlerChrysler merger, such as:
• Chrysler gains a toehold in Europe, access to Daimler’s technology base and get an image boost from Mercedes.
• Daimler should benefit from Chrysler’s strong U.S. presence, design flair and manufacturing process that have made it the world leader in profit-per-vehicle.
• Future products could be derived off common platforms–the chassis that forms a car’s foundation–and share major components. Mercedes, for instance, might develop a luxury pickup truck based on a Chrysler platform at a much lower cost than it could otherwise.
• By teaming up with Daimler, Chrysler will gain greater access to the European market where Mercedes has more than 1,000 dealers. Chrysler has only 1% of the European market, compared to 12% each for GM and Ford.
• The merger may also help Chrysler overcome the problem that has dogged it in recent years–quality. The company gets high grades for design, production and profitability, but still lags its domestic and Japanese rivals on quality ratings.
Though, after the honeymoon DaimlerChrysler encountered a multitude of problems concerning compatibility and industry influences. In my opinion these problems could have been solved if the management would have been capable and trained. It could be expected that the sheer sizes of the undertaking made the merger complicated and take years to complete. The different cultures–Mercedes more conservative and stolid, Chrysler more freewheeling and dynamic–would be problematic to integrate. When Chrysler bought American Motors Corp. from Renault in the 1980s, many of Chrysler’s old-line executives resented ideas presented by AMC’s French managers. Also, a merger between Volvo and Renault collapse in 1994 because of culture