RE: Mercedes set to divorce Chrysler?
Friday 16th February 2007
Mercedes set to divorce Chrysler?
DaimlerChrysler review gets underway
 Mercedes CLS 55 AMG: giving people what they want |
Daimler-Benz and Chrysler look set to divorce, following the German company's hiring of finance company JP Morgan to explore potential futures for Chrysler.
Options include the straight sale of Chrysler, spinning off Chrysler to shareholders or continuing with the situation as is. The third option is, according to a sources close to the company, the least preferred.
The two companies merged in 1998 with the hope that some of the German company's success would rub off on the ailing Detroit firm, and the combination could become a global automotive powerhouse.
That hasn't happened. Chrysler was heavily exposed to the SUV and truck market just as US consumers started moving to smaller vehicles. It misjudged demand, leading to an inventory stockpile, and it lost €1.1 billion (about £720 million) in 2006. Mercedes by comparison made €2.4 billion (£1.6 billion) last year but the group's results were dragged down by Chrysler' losses.
Following the announcement of the review of the relationship between the two organisations, there was a lot of trans-Atlantic solidarity expressed, with execs saying that there wouldn't be finger-pointing, nor would the review process affect the relationship.
But the fact remains that while Mercedes has managed to remain focused on giving people what they want, Chrysler has been caught on the hop by assuming that the US consumer's love affair with big gas guzzlers could never end.
Discussion
The article indicates Chrysler is not giving consumers what they want, I respond with a few pointers to the Management in Germany. Chrysler has an outstanding truck where in Diesel form has fuel economy the others would have to double to touch, the rest of the truck is on par with the competition and personaly the best looking on the outside, soften the interior. As for cars, Chrysler is the only company producing a line of cars with personality. SRt4 in the neon chassis. Crossfire however impractical two seats may be, market it different, market it to those who desire zest day to day when driving solo to work and about town, keep the sedan at home for going to dinner, the spouse to go to work in and ferry the kids and a ram in the drive to perform weekend tasks. The viper for the enthusiast and the 300 for a nice sedan. Mini Vans, looks and utility abound in Chrysler. Market better and beat the competition. The Challenger will sell, make 2 or 3 trim levels and get the teens thru mid-life crisis forty somethings. Notice the bowtie has the GTO and Vette, a decent truck and minivan, to many SUV's, Ford is following suit with to many SUV's and in my mind, only the hot rod mustang to show any sex appeal.
Surely Chrysler must be providing MB with huge economies of scale by using it's components in such large numbers (or maybe I'm wrong and the number of Chryslers produced is a mere fraction of MB output).
Seems to me that if the MB suits can't make this alliance work, they should stick to making posh taxis and leave the mass market stuff to others. Let's hope a new owner will continue to make the 300's and Viper. The rest, including all Jeeps, can go west as far as I'm concerned. It's done better by others. Shame on you MB.
Seems to me that if the MB suits can't make this alliance work, they should stick to making posh taxis and leave the mass market stuff to others. Let's hope a new owner will continue to make the 300's and Viper. The rest, including all Jeeps, can go west as far as I'm concerned. It's done better by others. Shame on you MB.
ducati916rdr said:
The article indicates Chrysler is not giving consumers what they want, I respond with a few pointers to the Management in Germany. Chrysler has an outstanding truck where in Diesel form has fuel economy the others would have to double to touch, the rest of the truck is on par with the competition and personaly the best looking on the outside, soften the interior. As for cars, Chrysler is the only company producing a line of cars with personality. SRt4 in the neon chassis. Crossfire however impractical two seats may be, market it different, market it to those who desire zest day to day when driving solo to work and about town, keep the sedan at home for going to dinner, the spouse to go to work in and ferry the kids and a ram in the drive to perform weekend tasks. The viper for the enthusiast and the 300 for a nice sedan. Mini Vans, looks and utility abound in Chrysler. Market better and beat the competition. The Challenger will sell, make 2 or 3 trim levels and get the teens thru mid-life crisis forty somethings. Notice the bowtie has the GTO and Vette, a decent truck and minivan, to many SUV's, Ford is following suit with to many SUV's and in my mind, only the hot rod mustang to show any sex appeal.
diesels still hasn't taken off in the us, despite resent developments. the crossfire is a c-class but softer, and to own a magnum
or 300 you must get the hemi or you'll feel like a wimp, then you're back in a gas guzzler.
as for the viper, there's other thing you'd buy for the money, it's competition is way ahead. i hope the challenger will sell, it's an instant classic 
When the "Merger of Equals" took place Chrysler was designing some sytlish cars and turning then into reality within what was roumoured to be 6 months.
MB has stomped all over chryslers creativity with its " we do it he MB way" attitude.
I beleive that most of the Chrysler design team were young enthusiastic designers with a great deal of talent and a fresh approach,
I heard that they were all botted out and MB took control.
So not we have over complicated cars designed by boring german designers playing it by the book in a unimaginative way.
It was never a merger of equals. if it were the company would be chrysler Benz as C comes before D for Daimler in the alphabet
MB has stomped all over chryslers creativity with its " we do it he MB way" attitude.
I beleive that most of the Chrysler design team were young enthusiastic designers with a great deal of talent and a fresh approach,
I heard that they were all botted out and MB took control.
So not we have over complicated cars designed by boring german designers playing it by the book in a unimaginative way.
It was never a merger of equals. if it were the company would be chrysler Benz as C comes before D for Daimler in the alphabet
notthehamster said:
Surely Chrysler must be providing MB with huge economies of scale by using it's components in such large numbers.
That's what I would have thought. Maybe they're not doing it enough? Though they are obviously doung a lot of brand engineering, hence the Jeep Coommander/Dodge Durango/Chrysler Aspen, and perhaps getting a little lax on the niche brands. The Jeep Wrangler, for example is a mere knockoff of its former self, according to enthusiasts. Maybe MB should be reworking the unimog into a modern CJ.
I think the Ford and M-B problems are fundamentally different.
Ford went wrong by trying to move upmarket with mass-market product dressed up as "premium". Slapping some fake wood and chrome trim on to a mass market car will never pull in the golfers who are jag's traditional market.
M-B went wrong by thinking their old product warmed over and mass produced with a Chrysler badge would pull in the punters. Chrysler is was and ever shall be a low rent brand.
The only similarity is both thought they could do a Honda/Acura, Toyota/Lexus, Nissan/Infiniti without really trying. WRONG!
Ford went wrong by trying to move upmarket with mass-market product dressed up as "premium". Slapping some fake wood and chrome trim on to a mass market car will never pull in the golfers who are jag's traditional market.
M-B went wrong by thinking their old product warmed over and mass produced with a Chrysler badge would pull in the punters. Chrysler is was and ever shall be a low rent brand.
The only similarity is both thought they could do a Honda/Acura, Toyota/Lexus, Nissan/Infiniti without really trying. WRONG!
5 USA said:
Ford went wrong by trying to move upmarket with mass-market product dressed up as "premium". Slapping some fake wood and chrome trim on to a mass market car will never pull in the golfers who are jag's traditional market.
Ford have a number of problems from what I've read.
The first is that they are a company doing too much, and Mulally can see that. For instance, how many different different types of V6s does Ford produce? There is a huge amount of replication going on. Someone on PH posted the link the Clarkson showing what went wrong with the British car industry with Leyland, and you can draw parallels from that to Ford today. (Too many divisions working against each other).
The other problem is that Fords sales are made up to a huge degree of fairly fuel inefficient vehicles, trucks and SUVs. When it was around $1 per gallon in the southern states only 4-5 years ago, and its at around $2 now, and topped out last year at $3.50, its not difficult to see why Yanks are starting to take fuel consumption a bit more seriously at the moment. The distances they travel for work in many respects is far greater than the British commute, and there aren't so many public transport options once you get outside a city.
It a sure bet Chrysler is going to struggle without MB. GM is sinking fast and Ford isn't far behind. The US government have had to bail Chrysler out in the past. Now they have a multi-billion dollar war to fund, which of the big 3, if any, can they afford to bail out this time. They're going to be the very small 3 soon.
A rumor on the news last night, just a rumor, that GM and Chrysler are talking merger.
www.latimes.com/business/la-fi-chrysler17feb17,0,2229376.story?page=1&coll=la-home-headlines
www.latimes.com/business/la-fi-chrysler17feb17,0,2229376.story?page=1&coll=la-home-headlines
The problem with Chrysler is the same with virtually all German endeavours in the United States. German companies expect Americans to be the same type of consumers that they are use to in Germany.
And that's just not the way things work over here.
Germans expect Americans to buy into the whole "German Engineering" mentality and they have had success in marketing their own brands to the few Americans that buy into that. They only sell upscale Mercedes and BMW's over here because they want Americans to identify their brands with luxury and performance. Americans on their first trip to Europe are always amazed at the fact that Mercedes are used as taxi's and police cars as they are usually two to three times the average price of a new car over here. I remember the first time I rented a C class in Frankfort. It had cloth seats and a manual transmission - something Mercedes has not offered in any of their cars built for the American market since the 1960's.
Unfortunately, the reality is that German cars are consistently ranked as among the worst reliable cars and by far the most expensive to maintain. While a small percentage of Americans are willing to put up with that in exchange for the prestige of the brand, the overwhelming majority won't. They simply want cheap comfortable cars to take their kids to school and the mall.
Volkswagen is the only exception to this kind of marketing over here, but unfortunately, they also suffer as among the worst in reliability. You would think after 70 years of making cars, they could come up with a window regulator that last more than two years. They can't...
And its not just with cars. I've seen it in my industry as well. Germans over engineer all types of equipment which while impressive on paper, results in maintenance nightmares in every day use.
As some of you pointed out, MB tried to take Chrysler upscale. Chrysler isn't an upscale brand. Chrysler is a mini van / Jeep / speciality (Viper, Prowler) company that has always produced low cost transportation. MB once again expected Americans to conform to their marketing efforts and "surprise!", they didn't.
Until German companies stop trying to make the consumer conform to their marketing agenda, they will never be successful in the US market.
And that's just not the way things work over here.
Germans expect Americans to buy into the whole "German Engineering" mentality and they have had success in marketing their own brands to the few Americans that buy into that. They only sell upscale Mercedes and BMW's over here because they want Americans to identify their brands with luxury and performance. Americans on their first trip to Europe are always amazed at the fact that Mercedes are used as taxi's and police cars as they are usually two to three times the average price of a new car over here. I remember the first time I rented a C class in Frankfort. It had cloth seats and a manual transmission - something Mercedes has not offered in any of their cars built for the American market since the 1960's.
Unfortunately, the reality is that German cars are consistently ranked as among the worst reliable cars and by far the most expensive to maintain. While a small percentage of Americans are willing to put up with that in exchange for the prestige of the brand, the overwhelming majority won't. They simply want cheap comfortable cars to take their kids to school and the mall.
Volkswagen is the only exception to this kind of marketing over here, but unfortunately, they also suffer as among the worst in reliability. You would think after 70 years of making cars, they could come up with a window regulator that last more than two years. They can't...
And its not just with cars. I've seen it in my industry as well. Germans over engineer all types of equipment which while impressive on paper, results in maintenance nightmares in every day use.
As some of you pointed out, MB tried to take Chrysler upscale. Chrysler isn't an upscale brand. Chrysler is a mini van / Jeep / speciality (Viper, Prowler) company that has always produced low cost transportation. MB once again expected Americans to conform to their marketing efforts and "surprise!", they didn't.
Until German companies stop trying to make the consumer conform to their marketing agenda, they will never be successful in the US market.
Edited by joecooool on Sunday 18th February 05:46
cat@10 said:
It a sure bet Chrysler is going to struggle without MB. GM is sinking fast and Ford isn't far behind. The US government have had to bail Chrysler out in the past. Now they have a multi-billion dollar war to fund, which of the big 3, if any, can they afford to bail out this time. They're going to be the very small 3 soon.
I still think the irony is that it was Chrysler that propped up MB after they merged as MB had very serious financial problems as customers switched to other brands.
It could easily be argued that the money that turned around MB, and is paying dividends was done at the expense of Chrysler. And now that Chrysler has been deprived of cash, its the one thats now hurting.
a.g. said:
tinman0 said:
cat@10 said:
It a sure bet Chrysler is going to struggle without MB. GM is sinking fast and Ford isn't far behind. The US government have had to bail Chrysler out in the past. Now they have a multi-billion dollar war to fund, which of the big 3, if any, can they afford to bail out this time. They're going to be the very small 3 soon.
I still think the irony is that it was Chrysler that propped up MB after they merged as MB had very serious financial problems as customers switched to other brands.
It could easily be argued that the money that turned around MB, and is paying dividends was done at the expense of Chrysler. And now that Chrysler has been deprived of cash, its the one thats now hurting.
Correct.
But never underestimate Corporate Ego.
FWIW 26 years service under the 3 pointed star before someone offers the imminent and obligatory "What do you know?" comment.
which dept did you work in at MB?
i think the sad thing is that after Chrysler propped up MB 6 years ago, MB didn't give Chrysler anything back.
for instance, the crossfire had the original SLK underpinnings, which weren't shabby in the slightest - but lets face it - customers want this years fashion - not last years fashion no matter how good it was. and what muppet said "oh the crossfire uses the last SLK generation chassis"? P45 time for him.
the crossfire is an example of a vehicle that should of stood shoulder to shoulder with the SLK mk2. but Merc don't want to lose sales to their "rival". they sell f*ck all Mercs in the US, and f*ck all Chryslers in Europe. there really wasnt a huge overlap.
and heres where the thinking went wrong, Chrysler weren't their rival. they were part of the family.
this family things is what tore apart British Leyland - huge number of brands all working against each other. Ford have a similar problem in the fact that they have huge replication of components produced by different parts of Ford (eg Ford Europe, Ford US, etc). apparently if you count the number of different V6s Ford produce today its shocking. different parts of Ford are working against each other.
you also have cars like the Sebring Convertible which is a very pretty car, that suffers terribly from scuttle. why not put it on the CLK platform. so many places where platforms and components could of been shared.
and if you don't want Chysler sales to eat into your base European market - heres a whcacky thought - don't sell your US cars in Europe.
for instance, the crossfire had the original SLK underpinnings, which weren't shabby in the slightest - but lets face it - customers want this years fashion - not last years fashion no matter how good it was. and what muppet said "oh the crossfire uses the last SLK generation chassis"? P45 time for him.
the crossfire is an example of a vehicle that should of stood shoulder to shoulder with the SLK mk2. but Merc don't want to lose sales to their "rival". they sell f*ck all Mercs in the US, and f*ck all Chryslers in Europe. there really wasnt a huge overlap.
and heres where the thinking went wrong, Chrysler weren't their rival. they were part of the family.
this family things is what tore apart British Leyland - huge number of brands all working against each other. Ford have a similar problem in the fact that they have huge replication of components produced by different parts of Ford (eg Ford Europe, Ford US, etc). apparently if you count the number of different V6s Ford produce today its shocking. different parts of Ford are working against each other.
you also have cars like the Sebring Convertible which is a very pretty car, that suffers terribly from scuttle. why not put it on the CLK platform. so many places where platforms and components could of been shared.
and if you don't want Chysler sales to eat into your base European market - heres a whcacky thought - don't sell your US cars in Europe.
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