Why Chrysler is perpetually bankrupt
Just before its acquisition by Daimler, Chrylser Corporation was one of the most profitable auto companies in the world. Its investments and cost-cutting in the early 1990s - investments in people, technology, and equipment, and cost-cutting in waste reduction, letting extra layers of management “attrit” out, and eliminating unnecessary rework - led to low production and engineering costs, with dramatic increases in quality, marred by a few supplier gaffes. The company was earning rave reviews on just about every model, with the Intrepid, Ram, Neon, and (to a lesser degree) Cirrus all setting new standards in their niches. The Neon forced all competitors, including the Japanese, back to their drawing boards to get extra power, cornering, and space into their small cars; the Ram forced other truck vendors to revamp their interiors and boost their power and capacity. The Intrepid proved that you could have a big car that handled like a small car without losing comfort.
While Chrysler started to lose it in the mid-1990s, with Bob Eaton reportedly making foolish cost-cutting decisions that hurt the cars (Neon head gaskets, anyone?) and letting fat grow in middle management, it was still insanely popular, and technology continued to progress, with the company constantly innovating and forcing others to catch up.
Then came the acquisition, led by a frightened, crying Bob Eaton, and opposed by the only other American in senior management who had worked in Germany for any length of time - Bob Lutz, who spoke German, understood what was happening, and would have held out for far more favorable terms. Had Lutz prevailed, it might still be DaimlerChrylser, but Chrysler would be equal to or above Mercedes, not the other way around; the Crossfire, if they ever made it, would have had a Chrysler powertrain; and Chrysler would probably still be insanely profitable, despite the market hit in big trucks. Before the takeover, Chrysler made fuel-efficient cars, and it could react quickly, without the need to consult Germany for permission.
It took a year or two for the Mercedes crowd to worm their way in, accompanied by CEO musical chairs, but worm their way in they did. They took away Chrysler Credit from the Chrysler reporting line, changed all the signs, and started boasting of German engineering, in sales campaigns that invariably killed off sales. (But we’ve gone over that often enough.)
What Chrysler proponents often note is the sudden disappearance of Chrysler’s $8 billion emergency fund. This would have paid for ALL the losses sustained to date - most or all of which would not have happened if the takeover had not happened! Particularly because Chrysler Credit was a major profit driver. Talking about Chrysler revenue without looking at Chrysler Credit is ignorant at best, and cunning at worst.
But now we have more evidence of how things worked. We were told by insiders that Chrysler was forced to pay massive consulting fees to Mercedes engineers, even when they were assigned to help those same engineers on Mercedes cost reductions and quality improvements. We were told that Chrysler had to pay massive royalties on items they were forced to use, like the Mercedes automatic, which apparently is not quite as good as the ZF automatics which some say they were copied from, and which seems to have cost as much as the ZF. (ZF is not part of DCX.)
The Freightliner case has shown us that DCX has had no compunction about illegally shifting funds from one company to another as needed. Perhaps that is why Chrysler suddenly went from very profitable to very unprofitable, in a mere two years, with little other reason than being acquired by Daimler-Benz. We were told that Daimler-Benz was mis-led by Chrysler management and executives, and that the books had been cooked. Maybe. But given that DCX has been defending itself in courts across the world against charges of bribery, illegal movement of funds, and fraud, we somehow doubt that the poor innocents at Daimler-Benz were the victims. Indeed, we can point to their general modus operandi of buying companies, sucking them dry, and leaving them to try to salvage what they can - Fokker and Freightliner being two examples.
Of course then there are the benefits to the acquisition. Access to Mercedes’ parts bin - which means nothing. Chrysler could have bought active suspension technology from anyone, along with those ZF automatics. They don’t seem to have a choice on what parts they use, from those steering columns in the 300 to the apparent inability to pick a non-Mercedes diesel in their cars and light trucks; and when they do get parts, they are limited by Mercedes’ marketing demands (e.g. to five speeds in the LX automatics). The Mercedes parts are also almost certainly more costly than what Chrysler could design itself.
Then there’s access to Mercedes expertise. Well, that sure worked out well - it added three years to the development time for their vehicles, meaning that Chrysler is now behind instead of ahead.
Then there’s access to Mercedes’ quality. Mercedes quality ratings are almost invariably below those of Chrysler, and we think they’re experts? Why is that? Because Mercedes charges more?
The Germans apparently want DaimlerChrysler to drop Chrysler and sell it to the Chinese. We say that we also want Chrysler to be separated; but selling it to a Chinese company would be foolhardy, to say the least. Our solution is to make Chrysler independent but largely owned by Daimler. This would fix the problem of Chrysler’s profitability in short order, while allowing Mercedes to continue using Chrysler technology, engineering, manufacturing expertise, and volume discounts, all which they now depend on. However, they couldn’t continue to allocate massive amounts of money from Chrysler Group to their beloved Mercedes, so they can pretend to make a profit. That, in my opinion, is why Chrysler will never be set free, but will continue to spiral downwards, until there’s no more money to be sucked out. At that point, Chrysler will be set free, but probably not under the same favorable terms as Rover; and quite probably it will indeed be a Chinese company that takes it.
Wow, I didn’t realize Chrysler was doing such great work before Daimler Benz took over.
Unfortunately for Mercedes the so called quality problems and other misfortunes was a
direct result from the American Auto Company take over. History shows no other car
manufacturer has the over all engineering and technology patents of Daimler Benz since
they invented the automobile. No other brand has the mass appeal world wide that can sell
economy cars and transportation that can rival and surpass brands such as Ferrari, Rolls,
and others under the same brand name. A every day paycheck can put me behind the wheel
of a very nice Chrysler or a entry level Benz, but if I’m a flying high financial player
Chrysler has no offerings. Truth be told I’ve never encountered a desireable Chrysler
until the hand shake produced the 300c. One could complain about big bad Benz beating up
Chrysler, and one could also suggest that the current designs since the 300c have been
less then pleasing which I have to wonder if that’s the fault of Daimler Benz.
I put my Mother in a Chryser, my Father uses Dodge trucks for contracting, and I roll
around in a Chrysler 300c for general business because of the Benz connection. Many other
family members and associates have been loyal for the same reason, being that if we couldn’t
find a vehicle to suit the needs for classification and price from Mercedes new or used we
would look to Chrysler. I understand the frustration concerning the comments I have just
read and beleive some valid points have been made. I was pulling for Chrysler to give me
my full size luxury to compete with Caddy and Lincoln, and compliment current Mercedes while
being loyal to Daimler Chrysler. I guess its highly probable it won’t play out that way.
In the end The Chrysler Group did it to themselves before 1998 and if Daimler Benz has to
gut them for survival so what, they own them and business is business. Hate Mercedes Benz
if you want, that’s nothing new if you are aware of their history. Being aware of the
Mercedes Benz history, it’s overwhelming and in some cases disappointing like the current
situation. I think we will all be happy with seperate paths, and I hope Mercedes Benz will
survive with out Chrysler.
Well, it’s all very well to have a lot of patents, but I think if you look around you’ll find patents and actual innovation are two different things. Mercedes’ quality problems could not POSSIBLY have been Chrysler’s fault, partly because they started BEFORE the “merger,” and partly because Chrysler did not take over Mercedes; indeed, it was very much the other way around.
It’s all very nice for you to have your perceptions, but you’re flat out wrong.
Mercedes quality had been in the toilet much longer than people think if my former boss’s 240D was any indicator. I was driving a 250,000 mile plus ‘67 Sport Fury and he was driving a car with less than 100,000 miles and I think it was not more than five years old but I could be wrong. This would have been in 1987. The thing about it is, while he kept ragging me about my Fury, I kept taking him to and picking him up from the Mercedes dealer for all the times this supposedly superior car was in the shop being endlessly repaired. For what he kept spending in repairs, he could have had a fleet of ‘67 Plymouth Furys.
Brief Comment: Every company on any given vehicle can fall victim to a quality problem.
I was not referring to Chrysler directly damaging the Benz rep via engineering, trust me
I know who owns who. The implication is based off of the consequences in relation to the
cash shortage off of the Chrysler purchase and to be truthful a over zealous expansion at
the same time of Mercedes product. In comparison since the beginning, I’m sure there has
been more profanity uttered out in Chrysler product then Mercedes for reliabilty. The
problems the current mercedes face are definately not mechanical(overall) but electrical
from such operating systems most other cars would dream of. I don’t if I’m sure, but
usually patents represent innovation. As I stated, I understand being a enthusiast of a
brand, team, or auto company it’s hard to watch the suffering. If we are talking global
respect, and over history for reputation putting aside the odd dip in quality or problems
that all companies endure, Benz would be the King. As we write, the current line up has
and is vastly improving. The funny thing is with quality reports you have to exercise
due diligence for the truth. A interesting point with lets say Consumers Reports, suggests
that Toyota has the best quality bang for your buck and Chrysler carries around a
reliabilty stigma and Mercedes as of recent is just murdered along with other German brands.
This is the good part, Chrysler has the lowest recall rate in the business in North America
just ahead of Honda and they can’t catch a break along with Mercedes which has the best
European rep for least calls from roadside assistance. Toyota has the second worst recall
rate just behind Ford and wins the survey. The point is customer service seems to be
the winning formula for the quality report victory which is purely subjective from the
readership of that publication. J D Powers gives you something to go on by listing the
problems by 100 cars or whatever. Anyways you will see all the anxiety over reliabilty is
a bit of a joke. All new cars are under warranty so drive what you want based on your
criteria. A Lexus has (just speculating) a 111 problems per 100 vehicles, Chrysler 192,
Mercedes 244, and well Volkswagen 362. The translation is give or take 1.1 problems per
Lexus, 1.9 per Chrysler, 2.4 per Mercedes, and 3.6 on the Volkswagen so who cares. A very
small margin from best to worst on new cars with warranty. My concern is what the problems
are and if I like the Chrysler 300c more than a entry level Lexus I can live with the
additional 0.9 of a problem. In Mercedes case I can live with the 9/10 other areas it
out performs Lexus including mostly better resale value. In all fairness to Chrysler it is
hard to rebrand a brand. This is the advantage of some of the european marqees, even on a
dud the owner still drives a whatever…..
The tough task for domestic is you have to keep coming up with a smash hit. I drive a Dodge,
Chrysler, or Ford. Yeah sure. Then again I drive a Dodge Viper, Chrysler 300c, or Ford Gt.
American brands have to market the car, like the hopefully new Dodge Challenger. Thats
the difference. The person that says I drive a Porsche will say no other if it’s a base
boxter. On the other hand a Chevrolet guy has to say Vette. It will never change.
I guess I’m upset with the cancelled Chrysler-Viper crossover and was inspired by the
possibilty of future Chrysler products that warrant desire. One thing that can’t be taken
away from this marriage is the most awarded car on American soil. I wish Chrysler the best
of luck and hope we see resolution or a happy ending. No hard feelings.
How exactly did Mercedes end up with a cash shortage “due to Chrysler” when they stole Chrysler’s $8 billion piggy bank?
… for that matter, are you trying to say that the fact that Mercedes has twice as many problems as Chrysler is somehow OK because it’s only one per year? And it’s still Chrysler’s fault because they couldn’t concentrate on quality in the five years leading up to the buyout?
All I know, with this current competion in the marketplace, I belive Chrysler would not have been able to compete. Look at Ford. I know no one believes it but they are Bankrupt. If Damiler does not buy out Chrysler they would have been history.
Dave, I agree, totally, with your article. I don’t know where to begin in expressing my disagreement with the comments written in praise of Mercedes-Benz’s rule over Chrysler.
The gang from Stuttgart arrived in Highland Park like Hermann Goering going to a French art museum and set about looting and pillaging everything of value. I don’t see that they have brought much of anything to Chrysler, its employees, or its customers. Chrysler most assuredly would have survived on its own (if it had gotten rid of Eaton). An independent Chrysler would have still had Plymouth, which means it would not have found itself overly dependent on truck sales, and it would have maintained the ability to develop small cars.
The flexibility and ingenuity Chrysler had as an independent company would have allowed it to thrive and adapt. Chrysler would have had the award-winning 300 without Mercedes’ parts. Keep in mind Chrysler did the 300M without Daimler-Benz and that car could run with the best from Stuttgart and Munich all day long. Yes, Mercedes-Benz has alot of patents and a lot to be proud of. But don’t fall for the propaganda that they invented the automobile–the French actually had very sophisticated, practical, four-wheel steam cars on the road several years before the first, tiny 3-wheeled Benz was fashioned. And lets not forget all the things Chrysler invented or perfected long before any association with Daimler: hydraulic brakes, high compression heads, overdrive, aerodynamics, automatic choke, safety rim wheels, power steering (Hydraguide, misspelled as “Hydraglide” on DCX website), automatic transmission, disc brakes, hemispherical heads, electronic ignition, anti-lock brakes, minivans, electronically-controlled transmissions, etc.
I don’t really think it’s that hard to understand, Allan. Chrysler had $8 billion. They had their main profit driver, Chrysler Credit, taken away, and STILL have not managed to lose even half that - even with all the expenses incurred by the greedy Mercedes people sucking out cash. What is so hard to understand here? Do you hate American companies so much you can’t believe any can make money?
Oh, and thanks, Jeremy.
PS> The very first steam car ever made was in England, I believe in the 1600s… was not made COMMERCIALLY but it was there. There is absolutely no way Mr. Daimler could have invented the auto; it existed before he was born.
I believe they can make money Dave! I just think that with the asian competion, Kia, Hyundi, Toyota, etc, and the price war that has been going on for some time. It would have been very difficult for Chrysler to remain independent. Plus all the safety technolgy they have to put on cars, just to remain competive. Some of that is Daimler. The electronic stabilty program, anti roll mitigation etc. I do believe the Germain Enginering commerical was a slap in the face. I have been selling Chrysler and Jeep products for the last 13 years. I think they build some of the finest cars out there.
My friend Wilhelm immigrated to Canada from Germany in 1990.
In Germany he owned and drove BMWs and according to him Mercedes was junk.
He was a truck driver there and has not much good to say about Mercedes.
On the other hand, when comparing Mercedes and Jaguar value retention (in Canada)
vs. Chrysler, Lincoln & Cadillac, there was always a big gap. Maybe higher prices
gave the preconcieved notions that they were better, it is hard to say.
I know that from discussing with local Farmers that the Mercedes Diesel
(in Class Combines)is much more reliable and fuel efficient than the Cummins diesel.
While we must admit that Chrysler did get something from Mercedes in the takeover,
Mercedes got a lot more from Chrysler (including the $8 billion). I think Chrysler
would have still survived on its own. It remains to be seen what will happen.
Meery Christmas & Best Wishes to all for 2007!
Im from the UK and I personally would have never even considered a Chrysler in the past. However because of the takeover (basically Mercedes input)I would actually consider buying a Chrysler 300c. Thats something myself and many others from Europe, Asia and other parts of the world would never have considered. This is only because what the american companies have nothing decent to offer except maybe the Euro divisions of Ford or GM. Chevrolet has been in the UK for many years now and personally I wouldn’t touch even if they were free.
Now ask yourself one question. If I was the owner of a company would I pay $8 Billion for access to all those markets that Chrysler has tried and failed in before, under the guidance of one of the best brand name in the world? HELL YES 8 BILIION TIMES OVER
PEOPLE UNDERSAND YOU HAVE TO SPEND MONEY TO MAKE MONEY.
I don’t EVEN know where to begin. I think I’m gonna be sick!!! wheres my blood pressure pills
Again, Dave has hit the EXACT mark with a well documented chronological statement of facts. It all goes back to history. Unfortunately, there are way too many people that don’t bother with history. The very first line of the very first comment on this blog says it all. Then the poster goes on to retell in great length his own version of his own story. That is exactly what it is. A blather about Daimler Benz. I just can’t help wondering if it isn’t Dieter Zetsche writing the damnable thing because it is utterly nauseous in it’s entirety. Perhaps some ad writing minion put it together because it sounds just like a blubbling babble about something that does not exist anymore. Mercedes was destroyed years ago, and has NEVER come back. It is sheer arrogance to act like it is anything resembling the sort of automobile that it used to be! And that didn’t happen just overnight. Mercedes was given a well deserved moniker years ago when it was the car that was “a rich man’s play toy”. That…… is documentable fact. In 1976, I had just acquired a mighty nifty Plymouth Arrow. It was powered by a 1600 cc OHC 4 cylinder. It got about 40 miles to a gallon. My next door neighbor had a big fat Mercedes, also a new model. One extremely cold February morning, after 18 inches of snow, and a bone chilling actual temperature of -22 degress farenheit, my little Arrow started right up. The Mercedes ended up costing the neighbor over $350.00 for towing and various mechanical charges to even get it to turn over. That was in 1976! Where was the vaulted Mercedes myth then? The same place it is now. Overpriced, overrated, underdone, and prone to glitches, gremlins, and undeserved admiration of individuals as expressed here. Daimler has also established itself as the Prince of Thieves. Ask Freightliner, Bombardier, Chrysler, MAN, and anyone else that has dealings with them. An unsophisticated jury in Portland Oregon not only saw it, they rendered a GUILTY verdict on the facts about DCX. Denial that Chrysler was the company of the late 1990’s denys history. Something that only rewriters can do. Facts remain for all to see IF they take the initiative to learn of what they speak of write. I see here again and again, just now wonderful Mercedes has been to Chrysler. Not one of the comments took any interest to hear the truth as spoken by Dave in his on target article. NONE of what Mercedes has done for Chrysler amounts to a hill of beans. To save their own image, they have denied Chrysler engineers some really good stuff, while imposing arbitrary limits on what content Chrysler itself can utilize. How is this a great thing?? Stuffing a Mercedes rear axle under a Chrysler hardly qualifies for Mercedes content. Chrysledr has IRS suspensions and inboard disc brakes for PLYMOUTH concept cars, fercryininthemud sakes, YEARS AGO!! The truly great part of the 300 ins’t even related to the styling. It is the engine. The HEMI engine. Who developed that? Against a truly good 7 speed transmission that Mercedes made Chrysler shelf, the 5 speed (a re-engineered design clearly brought over from ZF clobbered up with Mercedes stuff to stave off being SUED…..AGAIN) is not the greatest answer to the power movement equations. Asserting that something is the greatest without the benefit of historical FACT is a noting more than an assertion of an opinion. Saying that it is so without facts rooting in the bedrock of history is a fantasy. A flight of feeling good while you are uttering it with no merit to it whatsoever. The continued assertion that Chrysler would not have been able to survive without Mercedes is pure unpropolagated bull manure!! Fortheluvofgreengrass sakes, it has continued to survive DESPITE Mercedes! HELLOOO. Wake up people. The statement that you have to keep coming up with smash hits is also pure outrageous assertion. The companies that stick to their CORE values are the ones that continue to survive, are viable, become more desireable, and generate profits. BMW jumps immediately to mind. This is where American companies jumped to in that they became arrogant of American buyers, churning out completely forgettable cars, laden with chrome, overpowered engines, and inept poor engineering and assembly. Enter VW and the Japanese. VW lost its place when it deviated from its core values, whereby its reputation has been permanently dashed. I don’t think you will ever see VW come back to where it was. Chrysler Corporation stuck to its core values. Their only problem is that engineering lead way to much pushing styling backward. The 1934 Chrysler Airflow IS the car that encompassed the engineering that all modern day autos are built from. Styling was deemed controversial, HOWEVER, when the models were shown, Chrysler ended up with over 25,000 FIRM ORDERS in hand. Walter Chrysler tried to rush engineering, and problems, as always inherent in new models, were the result. IF he had given the engineering staff one more year…… well who knows. However, the car endures. The same results with the 1957 models. The critical equation is the engineering or lack of quality build in those models. Yet, they also endure. They were based upon the core values of the company, and failed because in some sense the core value was DEVIATED from. Bob Lutz had it right. He could have continued to have it right if it were not for the stupidity and jealous murmurings of Iaccoca. Lutz had gone back to establishment of a core value within the framework of Chrysler. It proved itself over and over with mind blowing profitability. It deviated when Eaton, the SOP, went crying to Daimler. The chief flim-flam man, Schreemp must have peed his pants to see the bottom line. Greed and self agrandisement being his M.O. There it was, being OFFERED to him, yet he still felt he had to steal it, engineering a rigged up bit called the Merger of Equals. Article after article, book after book exposing the scam for what it was, and law suits still endure over it to this day. And Daimler did what for Chrysler? That you would personally not choose a Chrysler or Chrysler built vehicle is entirely up to you and your methods of decision making. However, don’t try to imply that somehow, Mercedes magically waved a wand and turned the Chrysler models into desireable entities. Chrysler still could build great cars, all on it’s own, except now it has suffered the flight of the truly good engineering staff driven away from the company by the drivel from Stuttgarts minions. I don’t agree with Dave in the sense that Daimler should remain in ownership of Chrysler in an effort to “free” it up. I believe that Chrysler needs true independence, which could be achieved if determined stock holders wish it to be. The form that I fear is that the issue of it’s viability is like blood attracting sharks from all over. Chinese manufacturers in particular.
Curtis, good stuff there! Your last sentence in your comments is what concerns me if Chrysler were set free. It would be like a pack of wolves on a sheep, all three divisions would sent in separate directions. That is the only redeeming feature to having Diamler as the parent company, that I can see!
At one time I aspired to owning a Mercedes but after observing M-B through the years I have concluded that M-B is the most over rater European company and Toyota and Honda is just as over rated but is not as over priced as M-B.
about Chrysler’s ups and downs I founded by luck on Time magazine website an article about Lynn Townsend dated of December 1962, just after the “plucked chicken” era
http://www.time.com/time/magazine/article/0,9171,827980,00.html
Curtis, besides the Chinese manufacturers, there also the Indian manufacturers we have to watch. In Europe the takeover of European stell Arcelor by Mittal steel, it had created some contreversy as well. http://en.wikipedia.org/wiki/Arcelor#Reaction_to_the_takeover
Bravo Curtis!!!! That was inspirational and right on the point. It is good to hear something like this from someone that truly knows and understands Chrysler’s long history, knows what it is now, and WHAT IT SHOULD BE. I feel that Chrysler could be so much higher grade without the “guidance” of Stuttgart. This is one of the reasons I don’t support today’s Chrysler Group. I don’t feel the products are up to the high standards I set for Chrysler, nor do I even have much interest in Mercedes engineered or Daimler owned products. To add to that, the way Daimler handles and conducts itself leaves a bad taste in my mouth. Their unhanded way of doing things just angers me to no end. This news about moving funds from here and there, bribing individuals around the world, their “merger of equal” crap, and other disrespectable acts from Germany’s “finest” is truly sickening. However, it is more sickening when people look the other way and proclaim Mercedes as the greatest thing since sliced bread.
I also can’t understand the notion of so-called MoPar fans coming in here and confidently saying Chrysler would be bankrupt without Daimler. Does anybody have any proof that shows that Chrysler Corp. was falling apart before Daimler came in to “save it”? Chrysler was the Company of the Year in 1996 and was quickly climbing to a higher status. The only thing that stood in the way was Bob Eaton. The only thing that really needed to be changed was the CEO - from Robert Eaton to Robert Lutz. I fully believe Chrysler would have been more stable had a bad year like 2001 came around with Lutz in charge. All one has to see is Robert Lutz’s influence at GM to know that he can turn a company around. As I like to say at GMI, GM’s gain is Chrysler’s loss.
I see that Chrysler Group is still hurting from the departure of Lutz and the “Dream Team”. I have yet to see anything added by Daimler. To my eyes, the design department has gone from being the industry’s darling to the industry’s joke. I’m not the only one as many magazines and even Autoextremist have come out and said they are confused by Chrysler bizarre and messed up designs. That is completely different than when Chrysler was winning design awards and admiration in the 1990s with the Neon, LH cars, Ram, Viper, etc….
I still don’t see the improved quality per quality surveys. Yes, Chrysler Group may be better than before, but compared to the rest of the industry, all three brands are still below the industry average. Why? Wasn’t that great Mercedes quality supposed to trickle down to Chrysler and take it to “number 1″ like Schrempp and company screamed after the buyout? How is it that Mercedes can be down for a few years and then return to above average quality, and yet CG still sits below average? Something tells me Daimler doesn’t truly care about CG and is perfectly happy to have it remain average.
What about dealer customer satisfaction? It wasn’t good before Daimler came in, and it looks like it is still below average now. Why hasn’t dealer customer service improved? It doesn’t help that good old Eberhardt was angering dealers with his “order or else” stance on cars in the ever-growing sales bank. Where did Eberhardt come from? Oh, that’s right, he was sent over from Stuttgart to “fix” Chrysler’s “terrible” sales and marketing staff. Of course, now that he is gone, so is pretty much all of the experience and talent in CG’s depleted Sales and Marketing staff after he ran people off with his micromanaging personality.
And now there are all these recalls with CG being named by the Detroit Free Press as “the most recalled company in 2006″. I read that are already recalls on the new 2007 models. Not good at all - and people are supposed to “trust” CG products? I can’t pin all of this on CG as I fully lay the blame on the people running CG - and that is Daimler. It does not help that Wolfgang Bernhard came in and immediately told suppliers to cut 15% or more off their prices or forget about doing business with CG. The suppliers, at already low profit margins, had nowhere to go but to cheapen their parts. It would appear those decisions are coming back to haunt CG. It isn’t only CG, but it is the same at Ford, GM, and others. Still, Chrysler is the one that can least afford anymore tarnishing of its image.
And now I understand Auburn Hills and Stuttgart don’t even talk to each other - that CG can’t stand taking orders from Stuttgart so it does things its own way, while Mercedes doesn’t even bother contacting its “sister” division when problems arise. If there is still an adversarial relationship to this day, then what is the point to keeping it together? The Daimler stockholders don’t want Chrysler and Auburn Hills sounds like it is tired of being told what to do by Stuttgart; it is a no-win situation.
I’m sorry to get off track here, but Dave and Curtis laid out very convincing arguments. Chrysler is certainly no saint and has done some things wrong over the years, but I really believe it was on its way to a better future in the 1990s. Unfortunately, that momentum was stopped for a few years when Daimler and Chrysler tried to mesh, and in this industry, you can’t take your eyes off the ball for one second. Those few years from 1998 to 2003, allowed others (Toyota and Honda) to pretty much catch and pass CG. Those two kept growing without any interference while CG was busy learning the Daimler way – which it really didn’t need in the first place.
I feel CG is in a more precarious situation NOW than if it were alone. All it takes is for the Daimler stockholders to vote against Dieter and put Chrysler up for sale. There is not a damn thing that we can do in this country since we own such a small amount of DCX. You could very well see CG become a part of a Chinese company whether you want to or not. We have no power to stop it. The Germans won’t care as they would be getting rid of the “bad” part of Daimler-chrysler.
Do you know what would be a great Christmas present for us Mopar faithful? If some automotive enthusiest such as Jay Leno or Roger Penske were persuaded to invest some of their millions in a car company by the name of Chrysler Corp. and buy it from Diamler, hire a real North American with a desire to return the company and it’s products to former status as relible, well engineered products. There would be no need to compete with GM and Toyota model for model, but carve out a niche much like BMW has done. It seems that Toyota is determined to be the Wal-Mart of car companies[ dominante force ]. If CC needed a luxury car line after 2-3 yrs M-B might be available at a decent price!
While I may not know as much about the skullduggery going on at DCX, I do know that the desirability of Chryslers product has diminished substantially in my eyes since the takeover ( Lets not kid ourselves here ) by Daimler Benz. In 1998 we had the beautiful
LH models, light, fast and powerful, at a reasonable price point, the Sebring convertible, best selling convertible in North America, minivans that set the world on fire to copy them, trucks, both mid and fullsize, that redefined what those vehicles could be, and the best known off-road brand in the world, Jeep. Sales were excellent, profits high, morale the best in the business. Chrysler Corporation was the car company everyone wanted to be. Even for several years after the takeover the residual products of the Chrysler management team kept the ball rolling at the company.
Since the Gutting of Chrysler, both financially and in terms of the loss of terrific people, the cars have become decontented, slow, heavy, and in my opinion, cheap and ugly versions of a never very attractive Mercedes line up. I have agonized over the slow destruction of this once admirable company. I personally will never forgive Daimler-Benz and Robert Eaton for destroying Chrysler. Robert Lutz and company for a brief time achieved something wonderful at Chrysler and I hope they are proud of what they accomplished there and then. I believe they would have made Chrysler the best of the current crop of automakers had they been allowed to continue their fine work. Shame on your greedy german hands, DCX. Sign me - forced to drive a ford.
Maybe the US Government should just bail them out again. That could keep all the blame games from continuing.
And as long as we’re in ancient history, Jake, maybe we should jail the Mercedes execs for aiding and abetting the Nazis.
It all sounds great guys, but what can any of us do. I look at the concepts, that the Chrysler group has displayed and not built over the years and it grieves me. The Razor,sling shot,NS minivan,Jeepster, the original Charger concept based on the LH platform. These concepts had direction. There is no question that Mercedes has tried to keep Chrysler down. In 1998 after the merger i had a document that showed clearly that over 50% of DCX’s profit came directly from the Chrysler group. The CATIA system developed with IBM was ahead of its time and was consequently taken by MG to be used for their purpose. The new Mercedes GST was the original Charger concept. (A four door that looked like a coupe). No one says anything much about this.I agree with Dave when he says that the Germans wormed their way in,and Bob Eaton parted like the Red Sea and said here are all my treasures take it. Just let me have (this is hearsay the 250 million you promised) my reward.Chrysler needs to heal its dealer network and their OEM’s if they intend to make a serious run for the money. Daimler isn’t going to help. Look at the 2.7L engine fiasco, Daimler extends the warranty coverage for sludge on their cars, but refused to do so for CG’s vehicles. Isn’t that like the good parent. Let’s say a prayer for the company that the good Lord would weed out the skum, and allow Chrysler to be the company it can be again. Mercedes the innovator does not like to be one upped ME412 ANY ONE. The money is still good at Chrysler and this is why they continue to hold on. Who believes that Chrysler would still be here if it was broke/bankrupt they would be dead gone, buried.
George wrote : ” If I was the owner of a company would I pay $8 Billion for access to all those markets that Chrysler has tried and failed in before, under the guidance of one of the best brand name in the world? HELL YES 8 BILIION TIMES OVER - PEOPLE UNDERSAND YOU HAVE TO SPEND MONEY TO MAKE MONEY.”
1) Chrysler did NOT get access to internaitonal markets because of Mercedes. They were making as much progress BEFORE.
2) Chrysler lost a huge amount of market share after the takeover, they didn’t gain it.
3) Mercedes did not invest that money in Chrysler; they speculated in Mitsubishi stock and diverted funds into making Mercedes look profitable.
Why not actually read the posts before coming back with a bunch of cliches?
Anthony. I for one DO BELIEVE that an individual CAN and SHOULD fight for what they believe in. What can we do… COMPLAIN. LONG, LOUD, FREQUENTLY. This is still the good old USA and we can express our opinions. Show support for individuals such as Dave Zatz who are striving to make a difference. ALLPAR is showing up all over the place AND getting noticed. Based on the belief that each of us knows about 100 people, perhaps not up close and personal, but you know the same guy in the grocery store, the mail delivery, the cops, firemen, your work place, in that then with about 40,000 members, ALLPAR is actually influencing potentially 400,000 people! That is FOUR HUNDRED THOUSAND. Somebody has gotta know somebody somewhere, and when the small ripple in the pond joins with another ripple, and another, and another….. the prospect is well reflected in our money system of compound interest. Only better person to person!
And jimboy, bank on the skullduggery. None of us here have much use for the poltical end of things, being enthusiasts, all we really want is the hot metal. Yet, unfortunately, crummy politics shows up in all it’s ugly forms. Believe all of us, if it weren’t going on, we would be more than happy NOT to have to report and try to uncover the vile underpinnings of the sad results of sneakabouts, vile liars, pickpockets, cheaters, and thieves.
ex mopar fan - - Hmmm you sound like someone that I know and have known for quite some time. With respect due to you, of course. Don’t run out quite yet. You have to believe.
anthony - YES, Chrysler was known as the “ENGINEERING COMPANY” for decades. Mr Lutz continued in that vein, challenging even the best of the best to produce. And the results spoke BILLIONS of dollars. The V-10 was an engine that Mr. Lutz was told could not be built, and even if it were built, it would not be able to run. Mr. Lutz took a select group, built the engine, invitied the naysayers in when it did it’s initial power up runs…. to redline at 6,250 rpm, and then left them in the dynamometer room alone to play with it all they wanted. We know what happened after that besides the truck. Now there are several companies with V-10 engines. Unfortunately, all that contingent has fled the company. Replaced by butt kissers and yes men, which translates into exactly what we have today.
Hello,
From what i read here i made a better picture of the Daimler takeover. When i first heard about it, years ago, it didn’t sounded right and now my opinion it proves to be right.
I live in Bucharest, Romania, and here we have a lot of Mercedes and European cars, but i drive a Chrysler New Yorker 1979. I must tell you that this car it’s the best car i ever drove. It’s 27 yrs old and it doesn’t want to obey the time, it fights with the time and it wins every time. The car it’s now in restoration work , but i like to keep it functional. I do a lot of journeys with it outside the city and especially long trips. I recently changed the shocks and bushings all around, but even when the shocks were bad and no bushings all worn out i was getting very comfortable ride. I mean i was more tired after a good sleep than after driving 400 km with this Chrysler, it is unbelievable. The engine it’s rock solid and plenty of power even if it’s underrated, the economy it’s also great, i get 22-23 mpg up to 110km/h which more than enough. And this and much more good things in an 1979 R-body model.
I think this speaks for the Chrysler engineers at that time and for the quality of the cars.
There are tons to say, but i do not think that what we are saying will improve the situation for CG. We are too small to count. Why doesn’t the US gov. do something or isn’t in it’s jurisdiction?
Alex, Bucharest.
Government intervention is never a good answer. That is part of the situation, in that government wants to be a part of everything in one’s life. The desire is to make you a government dependent. Then you have REAL problems.
I don’t think that’s true. You need government intervention to keep markets and people free. We’ve tried totally free markets and we got trusts, scams, and oligarchies with private armies but no real free markets. We tried anarchy - total lack of government - and we got Franco.
Interesting point about the government: When Chrysler tried to buy the Mack truck company in the 60’s, the US government blocked that move under the anti-monopoly laws. In the 80’s the US government forced AMC to spin off AM General in order to prevent a foreign company (Renault) from controlling a defense contractor. We have went from too much government oversight of the auto industry to not enough. Milliions of dollars were spent investigating Microsoft for non-competitive activities, yet the arguably fraudulent takeover of Chrysler has not been scrutinized at all. Daimler-Benz is about as bad as Enron (look at the recent allegations of bribery and lying to EPA). Maybe it doesn’t seem so bad because DCX just lays off a few thousand at a time, every round of “restructuring” that occurs. Once those jobs are gone, they won’t come back (at least not in North America).
Daimler is killing the proverbial goose that lays a golden egg. I suppose it’s easy for a big company like DCX to focus only on the short term: Mercedes doesn’t care about the Chrysler brand so it is not managing it well. The DCX website, with its inaccuracies in the Chrysler history section, shows what the German leadership thinks about Chrysler. When DCX cuts CG engineering and styling, it is like GM in the 80’s churning out cookie cutter cars, not realizing how hard it would be to rebuild the reputations of Chevrolet and Cadillac once they were all used up (GM directors didn’t care about the cars they were selling, they all drove Mercedes’); when DCX puts the Jeep name on a car (Compass), it is like British Leland wanting to put Rover V-8’s in Jaguars, with no concept of what made Jaguars great or what made people want them. Jeep is like Land Rover or BMW: all DCX need do is tend it well and it is a gold mine. But start tampering with it for a quick sale and it is over!
They’ve squeezed alot out of the Chrysler Group. But what will Chrysler be in twenty years? Cadillac built the CTS, got back in racing and boosted quality–that brand means something again and will be a force to be reckoned with. With DCX cuts I don’t see that there is much to follow up on the success of the 300, the one shining star in the Chrysler brand.
Jeremy,
“Milliions of dollars were spent investigating Microsoft for non-competitive activities, yet the arguably fraudulent takeover of Chrysler has not been scrutinized at all. Daimler-Benz is about as bad as Enron (look at the recent allegations of bribery and lying to EPA)”
Microsoft was found guilty, but the Clinton administration, which wanted to keep companies honest, left office, and was replaced by the Bush administration, which had gotten HUGE donations from Microsoft. I do agree with you about the apparent lack of consistency, but when the administrations changed, so did the attitude towards business. The current White House is not interested in corporate ethics. If they were, they might not have dismissed all those accountants who were trying to keep Halliburton and Bechtel honest - or they might have pursued evidence that showed that hundreds of billions have been stolen by contractors in the Iraq affair.
Daimler is indeed killing the golden goose, but they’ll find another. One could argue they should have treated Freightliner (etc) well. I sometimes say there are two ways to succeed in business: be very honest, or be very dishonest. Either way works.
Agree with most of your post.
While I may not agree with Mercedes when they boss around Chrysler, I think people tend to think it’s all Mercedes fault. Well, not really, its more like a matter of reputation: while Honda and Toyota were making reliable cars in the 80s and low 90s, Chrysler was making crap. A guy where I worked saved money to buy the Aries-K when it went out, only to send it back to the dealer 2 days after for so much stuff that weren’t working. Of course, this car was what we call a “lemon” but the ammount of “lemons” in Chrysler Company was probably much higher than the exported brands, which gave them a bad reputation. Lots of people wont even consider a new Chrysler now because they know they made crap during the 80s. I’ll stay Mopar because my first real car (2000 Cirrus) is a very well made car with great mileage, I’ve had no problems whatsoever with it, with the exception of a power steering recall (or something like that). While Mercedes’s reliability is now pretty low (as I heard, I dont drive one hehe), people buy a Mercedes for the image it gives, even if it goes to the shop 2 weeks per month. However, lots of old Mercedes could easily do 400 000km without much problems, thus their good reputation, and add to that the nice interiors and equipement, and you’ve got a winning formula.
DaimlerChrysler must fire anyone from the marketting departement and hire competent people. People that wont produce the Compass (avoid hurting a off-road brand for short-term cash), that will finally tell the custommers that Mercedes is the luxury brand, Chrysler is the affordable luxury brand, Dodge is the sport brand, and Jeep is the off-road brand. Affordable small cars?? Plymouth?? Smarts produce as Plymouth, along with a lineup of small compact cars and affordable midsize cars? Mercedes-Chrysler-Dodge-Jeep-Plymouth = Cadillac-Buick-Chevy/Pontiac-Hummer-Saturn? Just my 2 cents.
Despite my disgust towards Mercedes………………in defense of that outfit; they are truly good at ‘coachwork’, the fitment of body panels, etc. along with overall quality control————–with the flagrant exception of electrical components.
Just that Toyota and the other Japanese and now S Korean manufacturers caught up with and ‘eclipsed’ Stuttgart in fit and finish 10-15 years ago.
For the record: in a recent German survey that I posted here on Allpar a few months back; a majority of German drivers prefer Lexus over M-B.
Something to ponder.
For Dave; Your article probably holds more truth than fiction, although it would take a team of German accountants and suppeonas tp prove. The money that left Chrysler as well as the 12 Billion cash Daimler was reputed to have on hand in 1999 was probably all pumped into Mitsubushi in Gherhart’s foolish attempt to buy his way into Asia (36 billion when he was asked to retire). The most compelling argument for Daimler’s profit shifting from Chrysler is not what happened at Chrysler, but what happened at Daimler. In 1999 Daimler had 375,000 employees, a multitude of beaurocracies and a 3% profit margin. Chrysler had 125,000 employees and was negotiating their profit statement (North America only) down with UAW from 17% to reduce their profit sharing cost. Daimler has done nothing to justfy their improvement from 3% to 12% other than selling other winners such as Devilbliss and Bombardier. Chrysler on the other hand has gotten leaner, sales have continued to increase in a more competitive market and still they barely make a profit. If the stock market had not punished Daimler stock holders so profusely for Daimler’s posting losses at Chrysler they would not make a profit at all. The fact that Daimler had to allow a little profit to drift back to Chrysler tells you who generates the cash and where Wall Street goes to check Daimler’s pulse. Regarding quality and dependability, I have owned numerous Chrysler Trucks, vans and cars and never sold one with less than 185,000 and they all left running and working properly. I had one 1983 Mercedes 300D with the 5 cyl diesel that made a beautiful lawn ornament with a crankshaft that broke at 203,000.
A lot of history lessons need retelling in the comments above. For the guy with the Plymouth Arrow, that car was not Chryslers, it was built by Simca Rootes(British). I worked for Chrysler during two death door experiences and if Mercedes had not bought it it would be in much worse shape right now. The former BIG THREE are toast, they had the market and squandered it with poor product. They may have created a lot of new innovations but the quality couldn’t measure up to what is expected today by the public. The Daimler merger was a hugh mistake, for Daimler, but it probably kept Chrysler from the fate that Ford and GM are going through, for now.
Chrysler was the most profitable automaker in the world the year of the merger, and had $8-12 billion in cash. I somehow think they might have muddled through.
I can only speak of what I know, which seems to be a departure from some of the previous comments. Although I am relatively young (25), I have only driven Chrysler products (Chryslers and Jeeps) and feel that the company has always ben underrated. My first car was a hand-me-down 1995 LH-New Yorker, and it was IMO the most thoughtfully, well designed car on the road. It had style, comfort, room (thanks to Chrysler’s cab-forward design, remember that?), and the 3.5l v6 was no slouch, epsecially for such a large car. I was the envy of all my friends back in the 90’s, any time we went anywhere they would insist we took “the whale” (remember the lyrics from Love Shack?) Since then I’ve also owner a 1991 Cherokee, a 1997 Sebring JXi (which I still have) and a recently acquired 1989 Grand Wagoneer (AMC engineered, I know, but the were bought out by that model year) just for shits and giggles. Guess what, I’ve never (knock on the Woody’s fake woodgrain) had any real issues with any of them that I couldn’t fix myself, let alone any major mechanical defects, how many can say that about their Benz? I will continue to buy Chryslers, albeit used ones, atleast until the resurrection of an independent Chrysler Corp. I’ve never cared or longed for a Mercedes, and even if I were to spend such a ridiculous amount of money on a (gasp!) German car I would buy a BMW hands down. I don’t know any of the numbers or statistics, and I refuse to repeat hearsay. All I know is that before the merger, Chrysler was building some of the most reliable, stylish cars on the road, which the fact we still see so many pre-merger Chryslers (including mine) driving around is a testament to.
One of chrysler’s problems with the truck line is fuel ecomomy, they have never been able to compare with GM or FORD in that department.
Well, everything is over. Chrysler is already sold to Cerberus. They just signed the contract recently. “It’s official — the 1998 transatlantic merger that was supposed to change the auto industry has ended. Private equity firm Cerberus Capital Management LP took 80.1 percent ownership of the Chrysler group today. DaimlerChrysler retained 19.9 percent. Citing “highly volatile U.S. credit markets,” DaimlerChrysler said it would combine with Cerberus to loan Chrysler’s automotive business $2 billion”…from Automotive News
Being in the automotive business over 30 years,I had an early stint with Chrysler Products and I have to tell you,they ha the best drive trains out there,very well built,very reliable,great for fleet use as well.Then the 80’s came,K-Cars,please.The big cars were gone,with the expeption of the Gran Fury,{which we bought 1 new},the Diplomat and The 5Th Ave.I liked them,yes they had some quality problems,no worse them the anyone else of the time,but rarely major!Then,Mercedes Benz got involved,yes there were improvements,but at a high cost.Being in the repair business,I saw this 1st hand.Parts pricing went crazy,and to add insult to injury,which is what the europeans are famous for,they withhold service information,making repairs more difficult,not the some of the dealership techs did any better,but it did strain customer relations with repair costs and time.Thats why I have NEVER recommended any european car to anyone.Chrysler needs to be saved and owned by an American Co,lets ease up on this global market,and for god sakes…BRING BACK THE PENTISTAR!