Mercedes-Benz Admits to Chrysler Merger Mistake

Jurgen Schrempf was once the most famous car guy in the world. Not just in his native Germany where he ran what was one of the most admired auto companies in the world in Daimler-Benz, makers of Mercedes-Benz, Maybach and smart brands. He was famous all across, from Stuttgart to Detroit, from Tokyo to Johannesburg, Sydney to Rio. When Schrempf passed on the idea of taking advantage of globalization, he looked at several companies outside of Germany, including Ford and Chrysler, with whom he eventually courted.

Now famous for being a marriage of unequals, contrary to the line sold to shareholders on both sides, the merger of 1998 has finally been labeled officially a mistake by Daimler CEO Dieter Zetsche. The man who replaced herr Schrempf at the helm was addressing a gathering of business leaders and policy makers at the St Gallen Symposium in Switzerland. Zetsche said the theory behind the merger made sense (and hopefully cents).

"But the reality was that we couldn't actually achieve global integration because it was at odds with the image of our brands, the preferences of our customers, and many other success factors -- all of which were far more diverse and fragmented," Zetsche said.

“It's fair to say that we overestimated the potential of passing leading-edge technology from Mercedes-Benz to Chrysler. Unlike premium brand customers, American volume brand customers are far too price-sensitive to absorb its cost…In the final analysis, we learned a practical lesson about the limits of globalization," Zetsche told the gathering.

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Automaker Mercedes-Benz
Article type General