rabenschlag
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DaimlerChrysler Considering Selling Chrysler

Wed Feb 14, 2007 8:13 pm

German media are reporting that DaimlerChrysler is seriously re-evaluating whether they should sell Chrysler. After another unsuccessful year at Chrysler and and little hope on the horizon, a stop-loss strategy is apparently under consideration. At the same time, Mercedes seems on track in terms of profits.

http://www.spiegel.de/wirtschaft/0,1518,466254,00.html

I find it quite impressive that both BMW and Daimler apparently were not able to handle a big merger. How can that be? Is that a sign of bad management at work or is it a sign of how unpredictable markets/companies are. Probably a mixture thereoff.

If they sell, this will be huge. See how well BMW has evolved since they got rid of Rover. At the same time, think of the consequences for Rover workers. Rover is now Roewe, produced in China.

Cheers,

r.
 
Klaus
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RE: DaimlerChrysler Considering Selling Chrysler

Wed Feb 14, 2007 8:58 pm

Quoting Rabenschlag (Thread starter):
I find it quite impressive that both BMW and Daimler apparently were not able to handle a big merger. How can that be?

Because synergy is a great buzzword to throw around in glossy corporate brochures, but much, much harder to achieve in reality...?  mischievous 
 
pelican
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RE: DaimlerChrysler Considering Selling Chrysler

Wed Feb 14, 2007 9:31 pm

Quoting Rabenschlag (Thread starter):
I find it quite impressive that both BMW and Daimler apparently were not able to handle a big merger. How can that be?

The majority of mergers doesn't work in the end. So both cases seem to confirm this.

pelican
 
rabenschlag
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RE: DaimlerChrysler Considering Selling Chrysler

Wed Feb 14, 2007 9:42 pm

Quoting Pelican (Reply 2):
The majority of mergers doesn't work in the end. So both cases seem to confirm this.

Is this an empirical fact? If so: Can economists predict which mergers will work and which won't? If not, any merger would be a gamble. How could highly educated, multiply controlled CEOS and boards venture to do that?
 
Klaus
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RE: DaimlerChrysler Considering Selling Chrysler

Wed Feb 14, 2007 9:45 pm

Quoting Rabenschlag (Reply 3):
How could highly educated, multiply controlled CEOS and boards venture to do that?

That's assuming that this actually amounted to competence, which is a somewhat daring assumption...!  cool 
 
pelican
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RE: DaimlerChrysler Considering Selling Chrysler

Wed Feb 14, 2007 10:20 pm

Quoting Rabenschlag (Reply 3):
Is this an empirical fact? If so: Can economists predict which mergers will work and which won't? If not, any merger would be a gamble.

Well I was taught at the university that the rate of failures is high and some studies as well as textbooks claim that the majority of mergers doesn't work.
An accurate prediction is not possible. The very heart of business is that you have to take risks. Of course there are many known factors that influence mergers and acquisitions like cultural and management differences or uncertainties about the partner...
So an assessment of potential benefits and risks is always necessary - and much depends on whether this assessment was good.

pelican
 
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deltadawg
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RE: DaimlerChrysler Considering Selling Chrysler

Wed Feb 14, 2007 11:06 pm

I personally hope they do sell Chrysler. It was a bad idea from the beginning. Two different types of companies, customers, regions, etc. The management at Chrysler at the time of the buyout (it was not a merger - it was a sellout on the part of the then current Chrysler management) sold the company for their profit taking, not to "synergize" the company and make it more competetive.

Chrysler just reported a 1.5billion USD loss for the fourth quarter and announced appx. 10,000 job cuts and multiple plant closings. Chrysler is suffering fromthe same problems as GM and Ford - too many SUV's and trucks and union demands. Yet Daimler so far has done nothing but pile cars on top of unordered cars. They have even parked cars at the DTW airport because they don't have room a their plants and dealers aren't ordering cars.

This merger was doomed from the beginning because it was all a part of personal wealth, not what's good for shareholders and employees. I hope if they do sell Chrysler that they would offer it to Chrysler employees.
GO Dawgs, Sic' em, woof woof woof
 
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Coal
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RE: DaimlerChrysler Considering Selling Chrysler

Wed Feb 14, 2007 11:16 pm

Quoting Pelican (Reply 2):
The majority of mergers doesn't work in the end. So both cases seem to confirm this.

Do you mean specifically in the car industry? Or in general? If you mean in the general sense:

ExxonMobil
ChevronTexaco
Walt Disney + ABC
BP + Amoco
Total = Petrofina +Elf
Mitsubishi Tokyo Financial
Credit Suisse First Boston
JPMorgan + Chase + Bank One
AOL TimeWarner
SBC + AT&T + BellSouth
HP + Compaq
Sprint + Nextel
NBCUniversal = NBC + Vivendi
Symantec + Veritas
US + HP (!)
Alcatel + Lucent
AF + KL
LH + LX
Arcelor-Mittal = Arcelor + Mittal
KonicaMinolta = Konica + Minolta
Mizuho Financial
GlaxoSmithKline = Glaxo Wellcome + SmithKline
Adidas + Reebok
Tata Steel + Corus
Wachovia = First Union + Wachovia
Citigroup = Travelers Group + Citicorp
BHPBilliton = BHP + Billiton
Etc

Think economies of scale.

Cheers,
Coal
Nxt Flts: MI RGN-SIN | SQ SIN-RGN-SIN | CX SIN-HKG-PVG | SQ PVG-SIN
 
pelican
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RE: DaimlerChrysler Considering Selling Chrysler

Wed Feb 14, 2007 11:20 pm

Quoting Coal (Reply 7):

Do you mean specifically in the car industry? Or in general? If you mean in the general sense:

I mean in general. I was just saying what I recently read in a textbook which was citing some studies which showed that the majority of Mergers doesn't work in the end. What I can't say is what the criteria for a failure were.

pelican
 
baroque
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RE: DaimlerChrysler Considering Selling Chrysler

Wed Feb 14, 2007 11:26 pm

This topic bring to mind the curses of a US friend who had had bad experiences with Chryslers. As a result, he bought a Merc, and they promptly merged with - guess who! He was ropable. Maybe he will be able to "unrope".
 
Boeing4ever
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RE: DaimlerChrysler Considering Selling Chrysler

Thu Feb 15, 2007 12:21 am

Don't forget such mergers...


EADS=Daimler Chrylsler Aerospace, Aerospatiale, CASA, etc

Lockheed + Martin = Lockheed Martin

Boeing = Douglas + McDonnell = McDonnell Douglas + North American

And those aren't even the complete company lineages.

They all look pretty successful.

 airplane B4e-Forever New Frontiers airplane 
 
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Coal
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RE: DaimlerChrysler Considering Selling Chrysler

Thu Feb 15, 2007 12:28 am

Quoting Pelican (Reply 8):

I mean in general. I was just saying what I recently read in a textbook which was citing some studies which showed that the majority of Mergers doesn't work in the end. What I can't say is what the criteria for a failure were.

Don't believe everything the textbook says.

Cheers,
Coal
Nxt Flts: MI RGN-SIN | SQ SIN-RGN-SIN | CX SIN-HKG-PVG | SQ PVG-SIN
 
rabenschlag
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RE: DaimlerChrysler Considering Selling Chrysler

Thu Feb 15, 2007 2:15 am

http://www.nytimes.com/2007/02/15/bu...105238783&ei=5094&partner=homepage

Apparently, they decided against selling Chrysler. They'll slash 13.000 jobs in the US instead, that is roughly every 6th job. Lets hope that this helps...
 
pelican
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Joined: Mon Apr 05, 2004 9:51 pm

RE: DaimlerChrysler Considering Selling Chrysler

Thu Feb 15, 2007 5:31 am

Quoting Coal (Reply 11):

Don't believe everything the textbook says.

Sure. But on the other hand I haven't read the opposite yet. I think it all comes down to how to define failure and success.
For example if the value of the new company isn't higher as the combined value of the old companies I would call it a failure.

pelican
 
NASCARAirforce
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RE: DaimlerChrysler Considering Selling Chrysler

Thu Feb 15, 2007 2:40 pm

Quoting Rabenschlag (Reply 12):
Apparently, they decided against selling Chrysler. They'll slash 13.000 jobs in the US instead, that is roughly every 6th job. Lets hope that this helps...

Not for the now unemployed auto worker who has to get a job at Walmart... waiting for OU812 to start trumpeting again about how good the American economy and jobs are under Bush.
 
Boeing4ever
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RE: DaimlerChrysler Considering Selling Chrysler

Thu Feb 15, 2007 2:47 pm

Quoting NASCARAirforce (Reply 14):
Not for the now unemployed auto worker who has to get a job at Walmart... waiting for OU812 to start trumpeting again about how good the American economy and jobs are under Bush.

While Bush's economy isn't the sparkling gem out wayward friend OU812 claims, do you seriously believe you can link the Shrub to this?

Buddy wake up, the US auto industry has been screwin' itself for years before the Shrub. And they'd still be in these straights regardless of the man in the White House...everything from the focus on gas guzzling trucks and SUVs, not enough focus on passenger cars, letting products languish, pushy unions, and spiraling health care costs. This was years in the making.

 airplane B4e-Forever New Frontiers airplane 
 
baroque
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RE: DaimlerChrysler Considering Selling Chrysler

Thu Feb 15, 2007 9:48 pm

Quoting Boeing4ever (Reply 15):
This was years in the making.

Very true and from this distance it is a real puzzle why the patient will not try and heal itself. However, the auto industry has form on this, so someone has to help, and one day a PotUS might just do that. So a sin of omission, but arguably, still a sin???

Then again, I have this funny belief that government actually can help. Sorry, I will go back to my cave now and flagellate again.  cry 
 
NASCARAirforce
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RE: DaimlerChrysler Considering Selling Chrysler

Thu Feb 15, 2007 11:48 pm

Quoting Boeing4ever (Reply 15):
Buddy wake up, the US auto industry has been screwin' itself for years before the Shrub. And they'd still be in these straights regardless of the man in the White House...everything from the focus on gas guzzling trucks and SUVs, not enough focus on passenger cars, letting products languish, pushy unions, and spiraling health care costs. This was years in the making

They have been off an on, but they were doing quite well in the 1990s. The gaz guzzling trucks weren't a big deal in 1997, when I bought my first Dodge Ram because gas was 93 cents a gallon. The Top 3 selling vehicles in America were the Ford F150, Chevy 1500 series and the Dodge Ram 1500.

There was a high demand for cars in the mid 1990s. I worked for a Chrysler/Plymouth/Jeep/Eagle dealer in 1995 (yeah that is showing its age with Plymouth and Eagle) while I was going to my junior college and people had to WAIT for cars after they ordered them - like the Grand Cherokee, Chrysler Sebring etc were never on the lot.

The Eagle brand never sold well so it was dropped in 1998, the only decent car they had was the Talon, which was the Mitsubishi Eclipse. all of the cars that Eagle had were clones of another, all of which had a Mitsubishi counterpart other than the Eagle Vision, which was an Intrepid/Concorde clone at the time.

Chrysler was doing very well before the merger with Daimler. The corporate culture mix did not work out well at first and Eaton and Lutz were gone, who did well with Chrysler.

However in the 1990s all of these incentives were unheard of like 0% financing etc. that you have now with car companies just trying to move their products.

Yes the companies were having problems in the 1990s, but people were still buying cars then.
 
Kay
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RE: DaimlerChrysler Considering Selling Chrysler

Thu Feb 15, 2007 11:54 pm

Quoting Klaus (Reply 1):
Because synergy is a great buzzword to throw around in glossy corporate brochures, but much, much harder to achieve in reality...?

I second that. Managerial and corporate jargon mixed with fashionable words, thrown inside ads and by salesmen with suits gets to me particularly!!!

Regarding the success of mergers in that sector, just look at Renault and Nissan who were extremely successful in the first years, despite a recent drawback.


Kay
 
Boeing4ever
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RE: DaimlerChrysler Considering Selling Chrysler

Fri Feb 16, 2007 9:05 am

Quoting NASCARAirforce (Reply 17):
Yes the companies were having problems in the 1990s, but people were still buying cars then.

Different times though. Gas prices will go up no matter what as we edge to peak oil...it's an "inconvenient truth" if I want to go Al Gore for a moment. And indeed, people are still buying cars now...you can't deny that. It's who's cars that's changed. PotUS has nothing to do with it.

At least at Ford, Alan Mulally will do good. Certainly more than anyone at 1600 Pennsylvania Ave. can do.

Quoting NASCARAirforce (Reply 17):
Chrysler was doing very well before the merger with Daimler. The corporate culture mix did not work out well at first and Eaton and Lutz were gone, who did well with Chrysler.

And herin lies some of Chrysler's current woes. Such a shame.

I do believe a resurgance is on the way...I just hope we'll pay more mind now to the future of energy.

 airplane B4e-Forever New Frontiers airplane 
 
AirCop
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RE: DaimlerChrysler Considering Selling Chrysler

Fri Feb 16, 2007 11:52 am

Never did understand why Daimler purchased Chrysler. At the time MBZ=quality and prestige while Chrysler = mediocre at best quality.
 
Lucky42
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RE: DaimlerChrysler Considering Selling Chrysler

Fri Feb 16, 2007 12:34 pm

I might never understand it ...But I have an SRT-8 and I love it and you can see the german influence in the design. But of course my purchase won't save a company but I really like the product I never thought I would buy a Chysler product but I did and I have not one complaint so far.
 
halls120
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RE: DaimlerChrysler Considering Selling Chrysler

Fri Feb 16, 2007 12:37 pm

Quoting Boeing4ever (Reply 15):
Buddy wake up, the US auto industry has been screwin' itself for years before the Shrub. And they'd still be in these straights regardless of the man in the White House...everything from the focus on gas guzzling trucks and SUVs, not enough focus on passenger cars, letting products languish, pushy unions, and spiraling health care costs. This was years in the making.

Chrysler, Ford and GM have been on a downward spiral for decades. They turned out crappy unreliable products in the 80's and 90's, and now that they have realized that the consumer wants quality, they are trying to compete, but they are hamstrung by their bloated union contract and retirement costs.

My father, who has owned Ford and GM products for years, is thinking about celebrating his 81st birthday this year by buying a new car - a Honda Accord.

It's all over for the former big three.
"Suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself." Mark Twain, a Biography
 
NASCARAirforce
Posts: 2452
Joined: Sun Feb 27, 2005 7:27 am

RE: DaimlerChrysler Considering Selling Chrysler

Fri Feb 16, 2007 1:08 pm

Quoting Halls120 (Reply 22):
Chrysler, Ford and GM have been on a downward spiral for decades. They turned out crappy unreliable products in the 80's and 90's, and now that they have realized that the consumer wants quality, they are trying to compete, but they are hamstrung by their bloated union contract and retirement costs.

My father, who has owned Ford and GM products for years, is thinking about celebrating his 81st birthday this year by buying a new car - a Honda Accord.

It's all over for the former big three.

I have bought Chrysler my whole life. If I go the leasing route, I will probably get a Charger or 300C, HOWEVER if I buy a car I am seriously considering a Toyota.

I question what really is an "American" car company. You have Fords and Chryslers being built in Mexico, while Hondas and Toyotas are being built in KY and OH respectively.
 
Lucky42
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Joined: Thu Jun 15, 2006 5:20 am

RE: DaimlerChrysler Considering Selling Chrysler

Fri Feb 16, 2007 1:15 pm

Quoting Halls120 (Reply 22):
but they are hamstrung by their bloated union contract and retirement costs.

I would expect a lawyer to expend some crap about that..I guess I get get off topic and talk about most of not all the ill's of this country being attriuted to lawyers and tort laws be it medicine or whatever. Legislaters and those in power are all lawyers for the most part.. I wouldn't blame middle class workers and unions for anything. They are moving things into mexico for the reason they all do for cheap exploitative labor and it lets them funnel more profits into the exectives already bloated pockets..
 
halls120
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RE: DaimlerChrysler Considering Selling Chrysler

Fri Feb 16, 2007 10:33 pm

Quoting Lucky42 (Reply 24):
I would expect a lawyer to expend some crap about that..I guess I get get off topic and talk about most of not all the ill's of this country being attriuted to lawyers and tort laws be it medicine or whatever.

Are you denying that the "big three" have significantly higher personnel costs than their domestic counterparts?
"Suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself." Mark Twain, a Biography
 
ltbewr
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RE: DaimlerChrysler Considering Selling Chrysler

Fri Feb 16, 2007 11:25 pm

I am not surprised by this decision by D-C. The problems that face Chrysler are the same as Ford and GM and have been building up for many years, including making poorly designed, made and serviced cars, unsustainable labor and legacy costs, and well run competition that holds down their ability to set the price and make a profit. People want their cars to be well made, and most of all reliable, something that the American 'big 3' have lost the perception of. That is why Honda, Toyota and to a lesser extent Nissan, Subaru and Mazda are all taking over the automobile market in the USA.
Chrysler, as does Ford and GM, all have to reduce the amount of production capacity they have, numbers of current employees they have, transfer production to more subcontractors, Mexico and third-world companies with cheap or non-union labor. They all also have to find some way to get out from their legacy costs for the 100,000's of retirees they have, including the white collar workers - something that the Japanese brands don't have.

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