From the Marriage in Heaven to the Divorce on Earth: the DaimlerChrysler Trajectory since the Merger

Abstract

This chapter outlines the conditions and objectives of the merger between Daimler-Benz and Chrysler in 1998 as the point of departure for a turbulent restructuring story which ended up in the sale of Chrysler to the private equity group Cerberus Capital in May 2007. The company never became really integrated and the German management had to take over the responsibility for the whole group with Chrysler, Smart, Freightliner, Mitsubishi and Hyundai in deep crisis. The nine years of DaimlerChrysler are mainly the story of the failure of former CEO Jürgen Schrempps’ ‘world company’ strategy. The permanent turnaround plans and restructuring programmes slowed down the ambitious internationalisation and synergy strategies and even forced the abandonment of some core projects. The DaimlerChrysler case shows the difficulties of transnational and intercultural mergers and of global corporate governance. The unintended outcome of the story is two new car groups, Daimler and Chrysler, clearly different from the pre-merger companies and with uncertain future. The analytical perspective adopted is a meso-political one concerning firms as complexes of power networks and interest constellations with a variety of internal and external actors involved. From this point of view, the DaimlerChrysler trajectory is a story of dynamic and contradictory interests, actors and alliances far away from neo-classical worlds of one-best-way optimisations and perfect competition in free markets.

‘We invented the automobile. Finally we will be at the top again.’

(CEO Dieter Zetsche at the end of his inaugural speech, September 2005)