Re: Daimler-Chrysler Divorce Negotiations Underway

Doctor Z is in reality the chairman of Daimler-Chrysler. DC commercials never exploited that little known fact, making him look a lot like "Joe Isuzu."

Daimler-Chrysler Divorce Negotiations Underway > > It seems the humorous but ultimately ineffective "Doctor Z" advertising > campaign was the last effort by German management to make something of > their acquisition of Chrysler. Negotiations are currently underway with > at least four private equity companies for sale of the Chrysler unit. > >
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> Recently, The Economist observed very little integration had occurred > between Mercedes and Chrysler. This, of course, will make the divorce > easier, but may also have contributed to the failure of the marriage. > > Still, it should be easy to unravel the assets. The Germans mostly > treated Chrysler as a captive parts customer, most evident in the move > to rear drive with the current Chrysler 300 and Dodge Charger, which > use rear suspensions and transmissions from previous Mercedes rear drive > applications. But while that was good for jobs in Germany, the decision > took Chrysler out of the mainstream market for large front drive cars. > The main advantage of rear drive over front drive occurs when very > powerful engines are installed. Yet most of the 300s and Chargers come > with 2.7s and 3.5s, which although large in the Germans' experience, are, > in the US, only premium mid sized engines. > > Lack of front wheel drive has probably depressed Chrysler and Dodge sales > in states with significant snowfall. This likelyhood should have been > evident in advance to the Germans. In places like Minnesota and New > Hampshire, a Subaru Outback shares the garage space with the tri-star > bejeweled motor car. The Subaru is used to arrive places. The Mercedes > is used, in good weather, to demonstrate the owner has arrived. > > But it wasn't just keeping Chrysler at arms length concerning product > development that caused this marriage to fail. While the Germans were > right to move Chrysler and Dodge upmarket, they failed to realize that > volume comes from lower priced cars - despite the in house example > provided by the C Class - and that volume is necessary. And so > discontinuing Plymouth was a huge error, tacitly acknowledged by their > refusal to sell the Neon as a Chrysler and by eventually eliminating > it from the Dodge line. > > The real answer was to badge the PT Cruiser as a Plymouth according to > the original plan, keep the Neon, sell the four cylinder Sebring/Stratus > as Plymouths, assign the short wheelbase vans to Plymouth, and sell > Plymouths at both Chrysler and Dodge dealers. Yet this obvious > solution to multiple problems was ignored. > > While the Germans may hope to obtain a decent price for Chrysler, > their bargaining position appears weak, because their own good > reputation will work against them. Both the recent "Doctor > Z" ad campaign and the previous short lived campaign claiming WWII > German rocket scientists were responsible for the early successes > of the US space program (true enough, but not known or accepted by > most Americans) displayed an attitude of nationality based management > and engineering superiority. Those potential buyers who believe it > will be hesitant to step in where the Germans, with their celebrated > skills, failed. Those who believe it is a myth will use the German > reputation for skill to overstate the difficulty and risks of the > situation, and reduce their offers for the Chrysler unit. > > The auto industry's most peculiar marriage (they didn't even live > in the same house) is nearly over. And, for that, both owner groups > have plenty to cheer about.
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Ed H.
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