Today’s news brings word that Daimler may be looking to break up with Chrysler. I find this particular merger interesting because it came up more than once in my MBA studies. While the problems we studied had more to do with integrating two different engineering cultures and technology platforms, the financial wisdom of such a merger was always what I questioned.
I have a strong anti-merger bias, having been on both sides of such mergers at each of my last three employers. I’ve written about them in this blog before. Thanks to this transcript of a PBS NewsHour segment, it’s possible to look back at the time when this merger was fresh and new.
I found it interesting to read how positively all the guests viewed the merger at the time. Not until almost the end of the segment do you find much skepticism about whether or not the merger will be successful.
We now have the news that Daimler-Chrysler wants a divorce. Shocking.
One more stupid merger falls apart because the people couldn’t get along. The Germans thought Detroit built crappy cars, and the Chrysler folk thought the Mercedes men dissed them. The hapless Dr. Z commercials were so discordant with American sensibilities even Beyoncé hood ornaments could not have saved the lines.
About the only way GM could buy Chrysler would be to trade its interest in Delphi for it. Marrying Ford and Chrysler would be a match between Alzheimer patients. Toyota needs Chrysler like it needs a UAW contract, and Carlos Ghosn now has a toothache at Renault.
Chrysler is as sick as a metropolitan newspaper, which means that there are buyers on Wall Street who smell blood and money, but not in Autoland. Kirk Kerkorian might resurface for a Chrysler redux, but at 90-years-old with his slots at MGM just spewing money, what does he need Chrysler’s misery for?
If Dieter Zietsche and his comrades are willing to take the hit, Chrysler will be sold to a hedge fund willing to stare down the UAW in the upcoming contract negotiations. This could mean a long strike like Goodyear recently weathered. I think Daimler has no stomach for this kind of war, so they will probably bail out quickly.
Some shrewd and gutsy people will step up for the minivan, Jeep and Dodge truck franchises. Chrysler is not a basket case yet, but the sooner the Daimler Dandies head back to Stuttgart the better.
With 3 and half years passing since the original post, just curious to what your thoughts are now? A lot has changed in the automotive industry the past few years.
The federal government intervening to save significant parts of the U.S. auto industry has been a huge change. Daimler took a huge loss to offload Chrysler onto a private equity firm, which confirms it as a failed merger.
As a Jeep historian and enthusiast – I’ve followed this company all my life, you’re posts are very interesting especially in light of the government bail-outs and the rest of the mess Detroit is now facing.