Mercedes-Benz Admits to Chrysler Merger Mistake

Daimler CEO Dieter Zetsche / Daimler

"We Learned a Practical Lesson"

By Thami Masemola
May 22, 2008 12:43 AM
Filed Under: Chrysler, General, German, Mercedes-Benz

Jurgen Schrempf was once the most famous car guy in the world. Not just in his native Germany where he ran what was one of the most admired auto companies in the world in Daimler-Benz, makers of Mercedes-Benz, Maybach and smart brands. He was famous all across, from Stuttgart to Detroit, from Tokyo to Johannesburg, Sydney to Rio. When Schrempf passed on the idea of taking advantage of globalization, he looked at several companies outside of Germany, including Ford and Chrysler, with whom he eventually courted.

Now famous for being a marriage of unequals, contrary to the line sold to shareholders on both sides, the merger of 1998 has finally been labeled officially a mistake by Daimler CEO Dieter Zetsche. The man who replaced herr Schrempf at the helm was addressing a gathering of business leaders and policy makers at the St Gallen Symposium in Switzerland. Zetsche said the theory behind the merger made sense (and hopefully cents).

"But the reality was that we couldn't actually achieve global integration because it was at odds with the image of our brands, the preferences of our customers, and many other success factors -- all of which were far more diverse and fragmented," Zetsche said.

“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…In the final analysis, we learned a practical lesson about the limits of globalization," Zetsche told the gathering.

Source: Autonews

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Comments

joelynn

May 22, 2008 1:33 AM

Chrysler gained the 300C (their greatest car), and the Crossfire... but I guess Mercedes-Benz got nothing out of it. Look at Chrysler's cars now... Mercedes used to own Mitsubishi didn't they? what happened there?

BENZian

May 22, 2008 6:46 AM

...the story about Mitsu was all over the papers long ago. Mitsubishi generated their won problems through bad products at the time and mgmt hid the evidence for years...not once but several times and Mitsubishi almost went bankrupt due to these issues. Schremp was a grandiose man and thought he could build an global automotive juggernaut in both the luxury and volume segments. His supersized ego cost Daimler millions in lost profits and lowered the value of the company. It could have worked but Schremp and the Germans looked down their noses at all other carmakers and did not realistically try and integrate operations and achieve lower costs through sharing technology or even shared components. This is why they failed with Chrysler. I have been a Benz man for many years but I am angry over the rape of Chrysler. When Daimler merged with Chrysler it was the most profitable American automaker and had cash reserves upwards of 25 billion. DamilerChrysler almost totally destroyed Chrysler, refused to share technology, destroyed the Chrysler design team and tried their damndest to use the cheapest parts and interiors for Chrysler vehicles. Many forget that up until a few years ago....Mercedes was the money losing cow and Chrysler provided the profits. Schremp is one of the most hated men ever to run DaimlerBenz as he destroyed shareholder equity and damaged the reputation of Mercedes Benz as no one had ever done before. Cliff notes version: Schremp is like Ferdinand Piech of VW ( grandson of Ferdinand Porsche) but not as smart.

benz_man

May 22, 2008 6:25 PM

That comment could be my dissertation. LOL Its very true though. Thats the sad part.

Bremen_Koenigsegg

May 23, 2008 7:17 AM

Well done! lol

nero_blitz

May 22, 2008 7:19 AM

I totally agree chrysler got milked for their cash and only recently got left overs hence the 300c and suspension enhancements. Imagine if things went like they were suppose to chrysler and dodge products would be doin much better.

The_woo_factor

May 22, 2008 12:20 PM

Merc cars look to americanised....

Pentium

May 22, 2008 1:11 PM

it's better this way...I agree it was a mistake..

bassam

May 22, 2008 2:01 PM

hahaahahaaha......i'm very happy...oh

sensei

May 26, 2008 12:16 AM

Globalization is a shrot term investment fantasy and nothing more. Long-term benfits are scant.