In 1998 Daimler-Benz and Chrysler merged to become DaimlerChrysler, a leading carmaker group that was supposed to benefit from significant synergies between the two companies. Actually this industrial combination aimed at preserving, strengthening and expanding the different brands of the former German and American manufacturers on a global scale. The USD 36 billion deal took place in an industry characterized by a large consolidation trend at the end of the 1990's when both companies were looking out for new markets and opportunities. Chrysler seemed to be an ideal target for Daimler-Benz due to its specific product line made up of minivans, sport utility vehicles and pickups that were particularly successful in the North American market. Chrysler's financial results had lowered the performances of the group for a decade as a result of which Daimler decided to sell a major stake of its weak partner in 2007. Indeed the US carmaker went through a severe financial crisis rapidly after the merger that prevented the newly formed group from obtaining the expected results from the combination. First we will focus on Chrysler's operating performance and issues faced between the years 1998-2007. Then we will highlight the post-merger problems that the US car manufacturer had to face and finally we will critically examine the timeliness, relevance and effectiveness of the measures taken by Chrysler's managers.
[...] First we will focus on Chrysler's operating performance and issues for the years 1998-2007. Then we will highlight the diverse post-merger problems that the US car manufacturer had to face, and finally we will critically examine the timeliness, relevance and effectiveness of the measures taken by Chrysler's managers. I Quantitative analysis of Chrysler's operating performance for the years 1998 - 2007 Over the 10 years under study, Chrysler had never achieved financial results that were equivalent to the projections made at the time of the merger in 1998. [...]
[...] Therefore it seems that Chrysler's managers did not have a clear strategy. First they attempted to reduce costs but it did not significantly improve the financial situation of the carmaker. Next they tried to differentiate their products by increasing quality but they lost customers. Finally they launched many new models instead of focusing on a few ones that could have satisfied customer requirements and improved Chrysler's competitive position. To conclude, Chrysler's management was partly responsible for the poor performance of the car manufacturer for the years 1998-2007. [...]
[...] “Billed as a marriage made in heaven, Daimler, Chrysler divorce”, Associated Press May 2007. SUROWIECKI, J., “The Daimler-Chrysler Collision: Another merger in search of that elusive synergy”, The Motley Fool May 1998. WALLER, C., “The US economy in 1998: uncharted waters”, < http:>, [Accessed on 20.06 .09]. DaimlerChrysler Annual Report 2000, p BURT, T., “Colliding with Chrysler : The troubles facing North America's third-largest vehicle manufacturer are casting doubt on the wisdom of its merger with Daimler ; but the problems are deeper than that”, Financial Times October 2000. [...]
[...] Moreover EBIT were even negative in and 2006. Nonetheless the operating profits were sometimes adjusted to take into account one- time effects due to the different reorganization plans and other cost- cutting measures; consequently these adjusted EBIT gave a better situation of the financial performances for years 1999-2002. ➢ Ratios: Firstly it can be observed that the contribution of the Chrysler division to the global group revenues had gradually decreased from in 1998 to in 2006. In fact it can be explained by the high positive correlation between Chrysler and DaimlerChrysler's revenues and EBIT; variations went in the same direction, but with a different intensity. [...]
[...] Thus many car manufacturers now give priority to more pragmatic and specific projects, instead of grand partnerships or combinations. In the DaimlerChrysler case, it is difficult to precisely know if the failure could have been seriously envisaged at the time of the merger. If many specialists like Stephen Cheetham, a European auto analyst at Sanford C. Bernstein Ltd. in London, claim that the company “obviously overestimated the potential of synergies and I [Stephen Cheetham] don't know if any due diligence or any extended sphere of time could have at that time given us a better . [...]
APA Style reference
For your bibliographyOnline reading
with our online readerContent validated
by our reading committee
