SUVs saved Chrysler (But Fiat will ultimately kill Chrysler)

This story illustrates that Chrysler will not survive selling rolling
coffins badged as Fiat-500's because the buying public in the US and
Canada do not want micro cars.

And it's too bad that Chrysler has only trucks and SUV's to offer, and
not any decent sedans. My 11.5 year old Chrysler 300m is doing fine,
still on it's original factory battery no less, but I'd like to buy a
new car.

I'd like to buy the 300N, an LH-based concept car that Chrysler showed
during the '2000 auto show circuit, a car that Daimler made sure would
never see the light of day as they raped Chrysler nearly to death for 7
years and practically destroyed it (Daimler did nothing to import and
sell Chrysler-made vehicles into Europe, for example).

========================

http://detnews.com/article/20110524/MIVIEW/105240374/Payne--SUVs-saved-Chrysler

Last Updated: May 24. 2011 1:02AM
Henry Payne/ The Michigan View.com

Chrysler and the White House will celebrate the Detroit icon's $5.9
billion repayment of government loans Tuesday in a ceremony that will be
hailed by both sides for the same reason: The government bailout had
become a liability for both entities.

In fact, government-free Chrysler is hardly off the debt hook, but is
simply refinancing its debt with private rather than public
debt-holders. For its part, the U.S. government will still have a 6.6
percent equity stake in Chrysler (and the Canadian federal and Ontario
provincial gov't will still have something like 2 percent - a detail
omitted by Henry Payne, the author of this story) - but by removing
itself as the company's loan shark, the White House can boast of the
unpopular bailout's success in returning taxpayer loans 6 years ahead of
schedule. That's an important sound-bite in an election year.

But there is one inconvenient truth you won't hear at the Sterling
Heights, Mich. ceremony: Chrysler wouldn't be here had it not defied its
green White House masters. Chrysler's return to profitability is a
direct result of the fabulous success of its SUVs.

The White House hand-picked Fiat to shepherd (if not out-right own)
Chrysler out of bankruptcy in June, 2009 because of Barack Obama's
obsession with remaking Detroit's automakers in the image of their
European peers. Convinced that Americans craved small cars to fight the
warming scourge, the president demanded Fiat bring its best-selling 500
Eurobox to the States as part of the acquisition deal. Obama was
convinced that Fiat could reform the immoral, gas-swigging,
SUV-dependent Chrysler (but Fiat will more than likely destroy Chrysler
in the process, which will no doubt end with the sale of RAM and Jeep to
someone else).

The exact opposite occurred.

Two years later, the little 500 is about to go on sale in dealer
"boutiques" - but it is the resurgence of America's appetite for trucks
that has brought Chrysler back from the dead. Chrysler Group reported
sales were up 17 percent to 1.1 million vehicles in 2010 on the strength
of its wildly popular, redesigned Jeep Grand Cherokee and Dodge Durango
SUVs. For CEO Marchionne, the SUVs success in the U.S. market has been
a revelation and he is planning to expand the SUV lineup into Europe
with Alfa Romeo and Maserati-badged trucks. Marchionne is no starry-eyed
green - he has realized that trucks like the Cherokee typically rake in
twice the per-vehicle profit of cars (thus the beleaguered company's
speedy repayment of U.S. loans).

Chrysler's truck sales - largely ignored by Obama's green media parrots
- has also been good to UAW workers as Chrysler's Detroit assembly plant
is now at full, three-shift capacity.

But there is one more inconvenient truth: Chrysler has been here before.

After it repaid its 1980s loans under the legendary hand of Lee Iacocca,
Chrysler was unable to diversify into smaller vehicles. Today, as the
truck boom fades before the specter of $4-a-gallon gas, Chrysler is
still heavily dependent on truck sales.

Chrysler is back. But is it just 1980s déjà vu all over again?

 

My family and I have always had Chrysler products(DeSoto excluded). I
have now, a 1941 Windsor, 1991 New Yorker 5th Avenue, and 2010 Avenger.
My wife's Avenger is a great car. I love my NY'er, gets 30+ mpg on the
highway, bench seat, lots of room. Chrysler sedans are great cars, I
just wish that they would come with a bench seat option. If I had the
money, and in this "Obamacession" it is unlikely, I would buy a Charger
with the V-6.
My 41 with FluidDrive Vacamatic is all original, 23K miles, and drives
like new. My other favorite Chrysler cars were our: 2 64 Darts, 67
Plymouth Fury, 87 Fifth Avenue, 86 Lancer, 87 and 88 LeBarons. My
Grandfather first drove a 51 Dodge because he didn't like to shift! He
also owned a 55 Dodge Royal, both great cars. We also had a 61 Dodge
Pioneer, great car, a little weird looking, though.

 

Anothar MoparMan rant.

What evidence do you have that Daimler made no attempt to import (more)
Chryslers into Europe? There was no shortage, even in Germany, of
dealerships, incl those at/near Merc sites.

Maybe sales were slow because because did not want to buy them. You seem to
forget that cars must be localised to a degree.

North American suspensions are set for NA conditions - long, straight roads,
for example.

NA cars were/are famous for wallowing on winding European roads.

DAS

 

North American suspensions are set for NA conditions - long, straight roads,

the Volkswagen Routan is a good example of that......

 

DAS used improper usenet message composition style by top-poasting and
full-quoting:

==========
http://www.slideshare.net/ChristianFanning/daimler-chyrsler

Another major cause (of the failure of the merger) was the lack of
integration of manufacturing practices due in part to brand
incompatibility. Daimler’s brand was perceived to be fancier and more
elite, while Chrysler’s was considered to be inferior. Daimler dealers
in Europe even refused to sell Chrysler cars. Employees on both sides
refused to buy in. as such, there was no serious attempt made to
integrate manufacturing processes to produce the reduction in costs that
Daimler was looking for. Indeed, the culture clash seemed to be as much
between the products as between the employees of the two companies. Due
to the lack of integration, Daimler ended up with all of the
disadvantages of the merger with none of the advantages.

=========

“Chrysler’s merger with Daimler-Benz (in 1999) was a disaster from the
start. [...] Chrysler was the lowest-cost producer and the most
profitable car company in the world. [...] it took Daimler less than a
decade to drive Chrysler off a cliff.”

[Lee Iacocca: "Daimler Screwed Chrysler", BusinessWeek]

============

http://www.spiegel.de/international/spiegel/0,1518,445583,00.html

An American Tragedy
Will Daimler Shed itself of Chrysler?
10/31/2006

Chrysler is powerless to eliminate the causes of the current crisis in
the foreseeable future. These causes include the company's
disproportionately high dependence on the North American market, where
it sells just under 90 percent of its cars, and Chrysler's sales of
light commercial vehicles, which include SUVs, pickups and vans. And to
this day, Chrysler remains an almost purely US brand, just as it was in
1998, when Zetsche's predecessor, Jürgen Schrempp, praised the merger as
a "match made in heaven." Chrysler occupies only a marginal position in
the European and Asian automobile markets.

===========

http://www.glgroup.com/News/Chrysle...rket-and-Didnt-Listen-to-Those-Who--6944.html

Analysis

The DaimlerBenz Group set out to grow by acquisition rather than
organically in the 1990s. This was a mistake.

Daimler's Juergen Schremp saw Chrysler as a point of entry into the
American market. He did not want ever to make top class sedans in any
place but Germany, but he needed a service operation and a sales and
marketing organization with American market knowhow to back up his idea
of a massive marketing campaign for the Mercedes brand.

Chrysler fit the bill. It had a reputation as an engineering company,
and sales of its own vehicles would make it financially self supporting.
It would become, in time and with German knowhow, a North American
marketing arm for Daimler's vehicles, and would supply the lower end of
the market, the employees and servants of Mercede's buyers with cars and
trucks not branded as Mercedes.

From the beginning of the anschluss (takeover) Daimler began acting the
opposite of the story they had told to get the deal done.

No existing dealers were allowed to carry Mercedes and Chrysler products
in the same store.

No harmonizing of parts and service was undertaken between Chrysler and
Daimler.

Even production of Chrysler models in Europe itself was eventually
farmed out to jobbers like Austria's Steyr, which ultimately merged with
interior trim supplier, Magna, a Canadian firm, to form Magna-Steyr,
which now operates a factory in Graz, Austria, turning out branded Jeep
models that compete directly with Mercedes M-class "Jeep-type" SUVs, but
at a much lower price.

Daimler did not share economies of scale with Steyr to use harmonized
parts. Daimler wanted no one to confuse Jeeps with the M-class SUV.

Now, suddenly it seems, but actually long overdue, there is some joint
engineering taking place between Chrysler and Daimler.

It is risible that there are only, literally, a handful of dealers in
the USA that carry Mercedes and Chrysler branded cars on the same floor.

If the rumors that Daimler wishes to sell the poorly performing Chrysler
Group are true it is vivid testimony to the fact that after Chrysler
began selling cars designed under the supervision of Daimler it began to
fail.

It will be ironic if Chrysler survives under someone else's ownership
other than Daimler. The superiority of Daimler engineering and
management has been badly tarnished. Perhaps the underlying metal wasn't
precious at all.

================

http://www.streetdirectory.com/travel_guide/53007/car_focus/how_daimler_chrysler_merger_failed.html

Originally, the plan was for Chrysler to use Daimler parts, components
and even vehicle architecture to sharply reduce the cost to produce
future vehicles. But problems surfaced when Daimler's Mercedes-Benz
luxury division, whose components Chrysler would use, was averse to
contribute to Chrysler. Eventually, all Chrysler got were some steering
and suspension components, a transmission and a diesel engine and few
packages.

In return, Daimler had hoped that Chrysler would radically raise its
standing in the North American auto market. But due to tough competition
from Asian automakers, Chrysler fell short. Billed as a "merger of
equals," the $36 billion deal turned out to be anything but, analysts
said. Shortly, control of the combined company fell to Daimler Chairman
Schrempp.

"Eaton panicked," Lee Iacocca, said. "We were making $1 billion a
quarter and had $12 billion in cash, and while he said it was a merger
of equals, he sold Chrysler to Daimler-Benz, when we should have bought
them." And Daimler was an all-too-willing, if uninformed, partner,
analysts said. The company underrated the competitive forces that would
invade the North American car market and take market share from the
domestic carmakers.

 

"DAS used improper usenet message composition style by top-poasting "

How many chips do you have on your shoulder? And I trust you appreciated
your spelling error...

I would, however, agree, that the Daimler Benz's aquisition of Chrysler was
a really stupid move. My personal view (drived from opinion pieces with
which I agree) that the acquisition (not a merger) was driven by the
megalomania of the top managers, fuelled by the greed for vast American
salaries (untenable in a German company) which could be 'justified' by a
listing on an American stock exchange. That required a 'merger' with a US
company to make it quick and simple.

That said, this was not the first of the top executives' daft and expensive
actions. Little known outside Germany are the disastrous take-overs of AEG
(a white-goods company, i.e. one making refrigerators, cookers and other
such consumer goods) and a move into aerospace. The company withdrew from
both, with vast losses. In the former case the car division managers were
incandescent because of the diversion of focus away from cars and in the
latter there was a huge display of hyprocrisy. Having first lambasted
certain companies for going to the (German) govt cap in hand for subsidies
they then bleated they needed handouts to keep the aerospace division alive.

How's that for a rant?

(Not the first time I have said this here.)

I must add that some of the comments in the articles you cited have a slant
on them borne out of ignorance. For example, the reference to the Austrian
company Steyr. This is one of several contract manufacturers in Europe,
making vehicles and components for various car brands.

Another is Karmann: http://en.wikipedia.org/wiki/Karmann

My 2001 Mercedes CLK Cabriolet was largely built at the Karmann works in
Osnabrück in northern Germany. I even visited their plant and saw the early
Crossfires in the yard there. At its height it was building 100 000 cars a
year (but nothing under their own name), tiny by NA standards but not bad
for a European contract manyfacturer.

Karmann were/are one of the few specialists in soft-top mechanisms, which
explains why VW is funding its revival with a convertible.


BTW, on one trip to the US I hired a Sebring convertible, Chrysler's nearest
thing to my CLK Cab. In my opinion the Sebring was of a lower quality,
though probably worth the US price in comparison with the German price I
paid for the CLK (I bought in Germany and imported into the UK to save some
money -- prices have probabl;y become more aligned now).
I would not have minded being able to buy a Sebring in Europe at US
prices... then it would have been an interesting alternative... but its
landed price was not that different, given some of the mechanical mods it
had to undergo.


DAS
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To reply directly replace 'nospam' with 'schmetterling'
--

 

Furthermore, did you notice that Steyr is now Canadian-owned?

http://en.wikipedia.org/wiki/Magna_Steyr

DAS
--
To reply directly replace 'nospam' with 'schmetterling'
--