Daimler's Chrysler mistakes

Jurgen Schrempp faces a battle to build merger success

By the BBC's Rodney Smith

Back in the early 1980s, the French state-owned motor manufacturer Renault picked up a struggling US car-maker, AMC (American Motors Corporation), and bundled it into Talbot.

Talbot was the rump of Chrysler Corporation's earlier failed attempt to follow Ford and General Motors and develop a significant presence in Europe.

Mercedes Benz reputation was built on excellent saloon cars, Chrysler's was economy-class trucks.

But it didn't work. Renault and Talbot parted company, and Chrysler - now including AMC, whose Jeep was its most famous product - escaped to be reborn in the US under the gifted leadership of Lee Iacocca

Almost two decades on, Chrysler had carved an enviable niche for itself in the home market; a powerful base in economy and light truck manufacture - and highly innovative models, like the striking and ridiculously fast Viper, the first of the people carriers (and the best-selling in the US), the Voyager, and recently the cultish PT Cruiser.

So Daimler was not bagging a dud when it grasped Chrysler a couple of years ago.

The junior and nearly eclipsed American car manufacturer had fought its way back to become in some eyes the most vital of the three biggies.

BMW thwarted

Neither so well managed nor so focussed as Ford, lacking the sheer bulk and reach of General Motors; but a solidly performing innovator, a company with clever new ideas, delivering rewards to its shareholders.

There had been a BMW plan to nab Chrysler and fold the ailing Rover into it; to build them both up in the huge US market.

That was scuppered when Juergen Schrempp got there first.

< But the then DaimlerBenz supremo made three significant mistakes.

Mercedes Benz' motor business, and its reputation, was built on excellent saloon cars. Chrysler's bread and butter was economy-class trucks.

'Equals' lie

The merged entity, top-heavy with German talent, failed, possibly deliberately, to stop senior Chrysler people from leaving; some undoubtedly were pushed.

Yet they were the people who had made modern Chrysler what it was. Ironically, they were what Daimler had paid for, had it but realised it.

Mr Schrempp also made the mistake of lying to Chrysler and its shareholders, when he himself confessed that there never had been plans for a "merger of equals" as they had been led to believe.

It had always been Daimler's plan to dominate the American commodity car manufacturer, and turn it into a US subsidiary.

Mr Schrempp is now making another desperate attempt to rescue his ill-starred take-over.

DaimlerChrysler shares have halved since the merger; shareholders on both sides of the Atlantic are angry and want results.

Job losses

DaimlerChrysler has lost the sympathy of much of the American public, Chrysler's extensive dealer network has been promised more than it's been getting, and is disillusioned - though dealers I have talked to bravely battle on. And the US auto unions are angry.

The US motor market hit a wall at the end of last year; sales have slowed dramatically.

Mr Schrempp and his colleagues have a restructuring plan believed to involve the creation of a new centralising "executive automotive committee".

It will certainly involve retrenchment in some of DaimlerChrysler's other operations, like 9,500 jobs going at Mitsubishi in Japan, and plants elsewhere around the world.

But Mr Schrempp and his board have to get Chrysler back into the race if they are going to win this series.