Daimler-Benz Considers Dumping Chrysler

Discussion in 'OT Driven' started by TriShield, Feb 15, 2007.

  1. TriShield

    TriShield Super Moderator® Super Moderator

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    Slump Could Break Up Mercedes-Chrysler Merger

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    By MICHELINE MAYNARD
    February 15, 2007

    AUBURN HILLS, Mich., Feb. 14 — Every decade provides a new lesson for the American automobile industry.

    In the 1980s, automakers underestimated their Japanese competitors, thinking they would never build anything but small cars. In the 1990s, the Americans focused too heavily on sport utility vehicles, only to see profits wiped out when buyers’ tastes shifted back to cars.

    The lesson of this decade? Better to go it alone than bulk up through mergers and alliances.

    DaimlerChrysler said as much on Wednesday, when it disclosed that it was considering all options for its struggling Chrysler Group, including a spinoff. It has hired JPMorgan as a strategic adviser, people with knowledge of the move said.

    A breakup would end the historic acquisition nine years ago of Chrysler by DaimlerBenz of Germany, which was promoted as a merger of equals but has evolved into an unhappy marriage of opposites.

    Those deliberations were announced as Chrysler said it would eliminate 13,000 jobs — 16 percent of its work force — in the United States and Canada, and shut all or part of four plants by 2009.

    For years, the conventional wisdom in Detroit and at many foreign auto companies was that the best strategy for growth was to acquire, merge or form partnerships around the world. Just last summer, Carlos Ghosn, chief executive of Renault and Nissan, suggested to G.M. that the three companies link up to become a global giant.

    But the most successful companies have remained independent, like Toyota and Honda of Japan and BMW of Germany.

    Now others seem to be agreeing that focusing on a single company, with fewer distractions from partners, may be the better route.

    G.M. has been jettisoning operations it no longer feels are necessary, selling its stakes in the Japanese automakers Isuzu and Suzuki, as well as Fiat of Italy, and spinning off half of its financing arm. The moves have raised cash for it to develop the new cars and trucks that G.M. needs to reverse its slide.

    Ford is also streamlining, putting the luxury foreign brands it owns, like Aston Martin, up for sale.

    The goal for the American companies is to become leaner and more nimble competitors with the Japanese. It is a task that Chrysler once vowed that it, too, was ready to tackle, saying that it no longer wanted to be known as part of the Big Three of Detroit because it hurt the company’s reputation.

    Instead, Chrysler is again having to fix operations that have already gone through one major and one minor overhaul this decade.

    Chrysler, which lost $1.48 billion in 2006
    , said it would eliminate 11,000 hourly jobs and 2,000 salaried positions. Just over half of the cuts will occur this year, with the rest being completed by 2009.

    Its assembly plant in Newark, Del., and a parts distribution center in Cleveland will close, while truck plants near Detroit and St. Louis will each lose one shift of workers.

    Chrysler also said it planned to eliminate 10 to 20 percent of the 32 models it makes and reduce the number of dealerships it has by 10 to 15 percent.

    Ron Gettelfinger, president of the United Automobile Workers union, called the cuts “devastating news for thousands of workers, their families and their communities.”

    Basil E. Hargrove, president of the Canadian Auto Workers union, advised workers there to accept any incentives the company might offer them to leave their jobs. “We’re saying to people, ‘You’d better take what you can,’ ” Mr. Hargrove said.

    At the Warren, Mich., truck plant just outside Detroit, workers said they were surprised by the news, and blamed Chrysler’s parent for the decision to cut jobs. “They’re getting so much pressure in Germany that they’re slapping us around,” said Austin Gonzalez, a union steward at the plant. “Hopefully, when the bloodletting is all over, we’ll survive.”

    Analysts for years have debated whether the original deal with DaimlerBenz was a good idea. Some argued that Chrysler would not have made it this long without German parents. Others say that Chrysler has tarnished the image of Mercedes-Benz.

    In either case, the current situation was not what DaimlerBenz and Chrysler had in mind when they announced their merger in 1998. Back then, they were talking of the advantages they hoped it would bring, like the money the two companies could save by purchasing auto parts together and the ability to tap into each other’s engineering talent.

    “There isn’t any doubt that this merger is based on growth,” said Robert J. Eaton, the chief executive of Chrysler at the time. “If anything, the opportunities get clearer.”

    Not everyone saw it that way, including John F. Smith Jr., who was then G.M.’s chief executive. “I don’t see that there’s that much in the way of great synergy,” Mr. Smith said.

    Despite a few exceptions, the German and American sides never seemed to blend. For years, they kept each other at arm’s length when it came to their images, only to have Chrysler run to Mercedes for help last summer.

    Chrysler put on a series of commercials starring Dieter Zetsche, DaimlerChrysler’s chief executive, who reluctantly took on the nickname “Dr. Z” to help convince viewers that Chrysler was being shored up by German engineering. The spots only served to confuse some consumers who thought Mr. Zetsche was played by an actor.

    To be sure, DaimlerChrysler is not the only company to fall short of its merger promises. Mr. Ghosn has run into the same problem with the Nissan-Renault arrangement, which began after he had brought about a successful turnaround at Renault.

    Nissan posted record profits during his first six years there, but Renault encountered problems in 2005 that required him to divide his time between Tokyo and Paris. Then, with Renault not yet fixed, Nissan reported last month that profits for 2006 would drop for the first time since Mr. Ghosn took over.

    A top priority for G.M. and Ford, in their restructuring plans, has been to weed out many of their global partnerships, formed when merger frenzy swept the industry last decade.

    G.M., which resisted the merger trend outright, except to buy the Swedish automaker Saab, instead purchased small stakes in a number of foreign competitors on the premise that it could share engineering resources. But that never materialized and, in fact, became an expensive proposition in the case of the Italian automaker Fiat.

    G.M. purchased 20 percent of Fiat in 2000, thinking the two could buy parts together and share engine development. But in 2005, it paid Fiat $2 billion to get out of the deal, which otherwise would have required G.M. to buy the rest of the Italian company. Not long after, G.M. sold its holdings in Suzuki and Isuzu.

    Ford, meanwhile, collected several British brands during the 1990s, including Jaguar, Land Rover and Aston Martin, adding them to the Swedish automaker Volvo to create the Premier Automotive Group. It hoped the division would generate hundreds of millions of dollars in annual profits. Instead, the group has lost millions the last three years, leading Ford to seek a buyer for Aston Martin.

    Those moves at G.M. and Ford are meant to focus attention on their primary automotive business. If Chrysler finds itself on its own, it will face the same hurdles as G.M. and Ford as they try to remake themselves.

    Simply cutting is not enough, analysts said. All the Detroit companies need to build appealing cars in flexible plants that can shift according to buyers’ tastes.

    “If they do everything right — if management makes the right decisions and they really change the culture to become more relevant — they could be very successful companies,’’ said Ron Pinelli, the president of Autodata, which tracks industry statistics.

    But, he said: “There’s a lot of ‘ifs’ there. I don’t think there’s any one final restructuring plan. These companies are going to be constantly looking at ways to run their business.”

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  2. TriShield

    TriShield Super Moderator® Super Moderator

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    Chrysler's #1 problem?

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    Really awful new products.
     
  3. BLoG

    BLoG Scented Meat

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    JESUS FUCKING CHRIST MY EYES :ugh:
     
  4. BLoG

    BLoG Scented Meat

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    not that the new fords are much better :o
     
  5. BLoG

    BLoG Scented Meat

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    HAHAHAHHAHA is that red mini-charger the new avenger??!?!?!? :rofl:
     
  6. BLoG

    BLoG Scented Meat

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    the dakota would actually be ok if it didn't somehow resemble a honda element.
     
  7. Gary Busey

    Gary Busey Guest

    they should dump em. the chrysler-daimler benz marriage was almost as bad as AOL-Time Warner, IMHO :wtc:
     
  8. BLoG

    BLoG Scented Meat

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    the sebring, aspen, avenger(?) and compass are the only TRULY horrible things in there.

    The new liberty looks less gay
     
  9. terrist

    terrist Cowboy President > All other World Leaders

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    The only one that I like is the great cherokee:wtc:
     
  10. GReddy EX

    GReddy EX Guest

    Couldn't just edit your first reply?! :hsugh:
     
  11. BLoG

    BLoG Scented Meat

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    no
     
  12. GReddy EX

    GReddy EX Guest

    not so much
     
  13. TriShield

    TriShield Super Moderator® Super Moderator

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    You could make a laundry list of fatal flaws with each of those new models.

    At least they had the good sense to kill the Commander, but not before they wasted millions on it. :ugh:
     
  14. GReddy EX

    GReddy EX Guest

    fixed.
     
  15. Suncoast

    Suncoast New Member

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    i :love: my Charger R/T
     
  16. GReddy EX

    GReddy EX Guest

    Commander shoulda been built on the Ram platform, plain and simple. And it shoulda been a real world version of the Rescue (which was built on the Ram chassis), not just an overgrown Grand Cherokee.

    Got your 7 passenger seating and Hummer envy all knocked out in one package :mamoru:

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    Last edited by a moderator: Feb 15, 2007
  17. sub9lulu

    sub9lulu LSx RX-7 in progress krew

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    ford got the same aweful lineup
     
  18. Delegado Zero

    Delegado Zero OT Supporter

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    Will Iacocca be looking to buy Chrysler again like in the past?
     
  19. joeym43

    joeym43 All you'll ever see.

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    I think Chrysler would have been better off without the merger. They're an innovative company, but they let a lot slip away, especially minivans and crossovers.

    Too bad for them Lutz is at GM now, god those are shitty designs :rofl:.
     
  20. mads.

    mads. OT Supporter

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    whatever happend to them kicking ass with the magnum/300c/charger.
    i guess all that success went to shit with this new fugly line.
     
  21. TriShield

    TriShield Super Moderator® Super Moderator

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    The biggest issues with Chrysler.

    1 - Interior design and trim is completely foul.

    2 - Exterior styling is about as bad as it gets in the car biz.

    3 - They've released a host of new models that should have never been greenlighted instead of refining their existing products and making a good midsize car.
     
  22. TriShield

    TriShield Super Moderator® Super Moderator

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    Those are the only products they build that people want.
     
  23. DefBringer

    DefBringer Ronnie, if I don't do this, *that's* when I'm goin

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    I agree with all of those. But this includes the Charger. Weren't you fond of that car?
     
  24. DefBringer

    DefBringer Ronnie, if I don't do this, *that's* when I'm goin

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    BTW, threads like these are why I bother reading this site.
     
  25. mads.

    mads. OT Supporter

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    I agree with all 3 points. you'd think they'd take a point from the german designers of benz, considering in the last 2 years theyve realesed some of the best looking benz's in history.
     

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