DaimlerChrysler Essay ⋆ Business Essay Examples ⋆ EssayEmpire

DaimlerChrysler was the name of the entity created by the 1998 merger of two of the most storied names in automotive history, the Chrysler Corporation of the United States and the Daimler-Benz AG of Germany. This was the first major merger of an American and a German auto firm, and was valued at the time at $36 billion. The companies had co-headquarters, one in Auburn Hills, Michigan, and the other in Stuttgart. During its existence, it was the fifth-largest automobile company, by vehicle production, in the world.

Chrysler, a company created by auto industry legend Walter Chrysler in 1925, had, since the 1960s, been the third of America’s Big Three auto makers, continually lagging behind General Motors and the Ford Motor Company. After a near-bankruptcy in the late 1970s, the company bounced back spectacularly under the leadership of president Lee Iacocca. Iacocca introduced new products such as the K-Car and the minivan and secured government-backed loans during the company’s darkest period. By the 1990s, Chrysler’s successes in the marketplace, particularly with its minivans, large trucks, and Jeep brand, had made the company a lucrative proposition.

Daimler-Benz AG, Germany’s most famous brand, had been created in 1926 by the merger of the Daimler and Benz companies, two of the most important and innovative firms in the worldwide motor industry. After World War II, Daimler Benz reclaimed its place among the leading German firms by focusing upon quality and luxury vehicles, such as its flagship nameplate, the Mercedes Benz. While it remained among the most popular brands in Europe, by the 1980s and 1990s, the company was keen to expand its market share, particularly in the largest car market in the world, the United States.

In 1998, following a series of highly secret meetings, the two companies announced what they called a merger of equals. There were to be co-CEOs, German Jürgen Schrempp and American Robert Eaton, equally sharing decision making. The announcement of the merger was met with skepticism in many quarters, as some observers saw the coupling as ill-fitting, given Daimler Benz’s focus on luxury, while Chrysler was known for its big trucks. Some saw this as a strength, and believed the two companies would present a synergy for the new company. Others saw it as another example of America’s corporations being taken over by foreigners. Still others felt that the $36 billion that Daimler-Benz paid for Chrysler was far too high.

Initially, there was some success. The two companies shared some technology, and Chrysler’s quality improved through its association with Daimler. However, within a few years, it was clear that the decisions for the company were all being made in Germany, even for the Chrysler unit. Eaton stepped down in 2000, leaving Schrempp as the sole executive. The Chrysler unit’s chief executive was a German, Dieter Zetsche, and only a few products emerged from direct cooperation between the two entities, such as the sporty Chrysler Crossfire.

Soon, many in Germany, especially in the automotive press, were unhappy about the erosion of the Daimler brand and valuation. Many Americans were also unhappy, feeling that instead of a merger of equals, the transaction was actually a takeover. There were court cases over the merger by some of Chrysler’s main investors, which further drove down the value of the company. After 1998 a general downturn in the American market, coupled with high gas prices, meant that the success that Chrysler had experienced in selling large trucks and sport-utility vehicles was coming to an end. Its market share, which reached nearly 14 percent in the mid-1990s, declined to under 10 percent by the mid-2000s. The company’s stock slowly declined.

Given these difficulties, in 2007 Daimler announced that it was selling 80 percent of Chrysler to an American private equity firm, Cerebrus, for $7.4 billion. Daimler would maintain a 19.9 percent share of the company and also assume one-fifth of the company’s outstanding pension obligations to workers. Daimler also promised to invest $1.7 billion in Chrysler. In the end, the merger of these two companies was a failure. With the de-merger of the two companies, DaimlerBenz was renamed Daimler AG, while Chrysler took the name Chrysler LLC. Chrysler is a privately held company, while Daimler AG is a public company traded extensively in Europe and the United States.

Bibliography:

Vincent Curcio, Chrysler: The Life and Times of an Automotive Genius (Oxford University Press, 2005);
Charles K. Hyde, Riding The Roller Coaster: A History of the Chrysler Corporation (Wayne State University Press, 2003);
Arnd Klein and Helmut Krcmar, “DCXNET: E-transformation at DaimlerChrysler,” Journal of Information Technology (v.21/1, 2006);
Doron P. Levin, Behind the Wheel At Chrysler (Harcourt Brace & Company, 1995);
Bill Vlasic and Bradley A. Stertz, Taken for a Ride: How Daimler-Benz Drove Off with Chrysler (HarperCollins, 2001);
David Waller, Wheels on Fire: The Amazing Inside Story of the Daimler Chrysler Merger (McCarthur and Co., 2001).

This example DaimlerChrysler Essay is published for educational and informational purposes only. If you need a custom essay or research paper on this topic please use our writing services. EssayEmpire.com offers reliable custom essay writing services that can help you to receive high grades and impress your professors with the quality of each essay or research paper you hand in.