[Brookside]

A Corporate Divorce on the Cheap

STUTTGART, Germany, May 14 — Nine years after they exchanged vows at a huge, lavishly choreographed news conference in London, Daimler and Chrysler signed their divorce papers Monday at a sparsely attended briefing in an auditorium at an aging Mercedes-Benz factory here.


From left, Thomas LaSorda of Chrysler, John Snow of Cerberus and Dieter Zetsche of Daimler at a news briefing Monday.


Mark Landler/NYTIMES/5/15/007
As bookends, the two news conferences vividly illustrated the dashed dreams of the Daimler-Chrysler marriage.

At least for one partner, though, the sale of Chrysler to Cerberus Capital Management represents a potentially invigorating emancipation. Daimler, now largely free of its struggling American partner, can look ahead to what analysts generally agree is a promising future as a stand-alone maker of trucks and luxury cars.

“I’m very optimistic,” said Adam Jonas of Morgan Stanley in London. “Daimler is the largest truck company in the world and one of the most valuable premium car companies in the world.”

The price of freedom for the soon-to-be-renamed Daimler A.G. is $677 million in cash — its out-of-pocket outlay in the $7.4 billion transaction — for Cerberus to take Chrysler off its hands. It is also shedding nearly $18 billion in health care and pension liabilities. For a merger once valued at $36 billion, it was a humiliating comedown.

Nor are Chrysler’s long-term prospects clear. Cerberus dispatched its chairman, John W. Snow, the former secretary of the Treasury, to Stuttgart to drum up excitement about Chrysler’s future and to reassure managers and workers that the investment firm is not going to turn Chrysler inside out.

Among Daimler executives here, however, there was a sense that they got the good end of the bargain. The company’s businesses — trucks, buses and luxury cars — are among the fastest-growing and most profitable segments in the industry. And Mercedes-Benz, after a period in which it suffered from quality concerns and eroding profits, is on an upswing.

“There are more people with higher incomes,” said Garel Rhys, director of the Center for Automotive Industry Research at Cardiff University in Wales, “and they are living longer, so they have time to buy these cars.”

Though it will become much smaller, Daimler will have a stronger balance sheet, a hoard of cash and a clear focus. “The new Daimler will stand on a very solid foundation,” the chief executive, Dieter Zetsche, said.

None of this dispelled a palpable sense of regret on the part of Mr. Zetsche, who made his reputation running Chrysler and even lent his image to television commercials for its vehicles. The company will retain a 19.9 percent stake in Chrysler.

“We obviously overestimated the potential of synergies,” Mr. Zetsche said of the 1998 merger. “I don’t know if any amount of due diligence could have given us a better estimate in that regard.”

Daimler, he said, was not able to exploit the combination of its highly engineered Mercedes-Benz luxury cars with the mass-market vehicles of Chrysler because American motorists could not, or would not, pay a premium for a Chrysler equipped with Mercedes technology.

What Daimler encountered instead were the unforgiving vagaries of the American car market. Chrysler lost $1.5 billion last year, and the losses are expected to continue this year. Finally, Mr. Zetsche said, DaimlerChrysler could no longer bear the pressure on its profits or share price.

DaimlerChrysler stock closed up nearly 2 percent in Frankfurt trading on Monday, after jumping as much as 7.8 percent when news of the agreement with Cerberus was reported. It has risen 25 percent since Mr. Zetsche disclosed in February that the company was considering alternatives, including a divestiture.

Mr. Zetsche insisted that Chrysler did not drain cash from Mercedes. Despite its recent losses, it generated nearly $15 billion in cumulative profits during the years it was owned by Daimler. But analysts said Daimler could have found better uses for the cash it poured into Chrysler.

“They spent about $60 billion acquiring, restructuring and investing in Chrysler over the last nine years,” Mr. Jonas of Morgan Stanley said. “Just think where the next $60 billion could go if it was invested properly.”

Among other things, he said, Mercedes-Benz could introduce more innovative and alluring cars to compete with German brands like BMW and Audi. BMW, which has taken the mantle of the world’s top luxury carmaker in recent years, may feel new heat from its old rival.


more:http://www.nytimes.com/2007/05/15/bu...15daimler.html

[Brookside]

Probably good for Daimler in the long run..but awful for Chrysler.
Interesting that not a single automobile company was remotely interested in buying Chrysler...in part, I think, to avoid the bad publicity that would ensue over massive layoffs for anyone who would cut current labor contracts and abandon the financial burden of carrying Chrysler's generous retirement and medical benefits....both actions that make business sense but would spell doom in the court of public opinion.

Maybe too soon to say it's the the end, (they do have Jeep which is a moneymaker), but it feels like the beginning of the end.

As for Benz...it's my least favorite German brand. I don't see them challenging BMW...they have two very different philosophies about automobiles.

[spudw]

As much as Benz offers AMG tuning and some very beautiful cars, not to mention a legendary motorsport heritage, their road cars have never struck me as having the same performance orientation that BMW and Audi have. I'd choose a Benz to look rich or have a luxury ride, but I'd never favor one over a BMW for my daily drive.

Even at the ultra high-end, the cars are very nice (esp. the McLaren-built coupe and roadster), but I think in that price range I'd be more inclined to look at Aston Martin.

Buying a Benz is a nightmare. My father looked at switching from BMW to Benz but never followed through. Too many gadgets and options on a Benz. Buying a BMW is a relatively straighforward experience. Signals that BMW is more focussed on providing a solid driver-oriented car, rather than a techno-showcase of stuff that may or may not be reliable.

I spent quite a bit of time with an SLK a few years ago. Very nice, and solid, but not as tossable as I would have expected. And the seats were horrible.

[Brookside]

Originally Posted by spudwest

I spent quite a bit of time with an SLK a few years ago. Very nice, and solid, but not as tossable as I would have expected. And the seats were horrible.

Speaking of SLK's...brand new (badged 2006) Crossfire's for sale in my neck of the woods @24k...$12,500 off msrp.

I would not like to be working for Chrysler right now and I wouldn't stick around to see how it plays out...I would imagine resume's are being Fed-Exed like crazy.
Look for Chrysler to hemorage brain-drain.

The other thing is does this affect Mercedes - is there any blow-back?
Whatever...in the long run BMW comes out smelling pretty.

[spudw]

Was there ever really a strong consumer association of the Merc brand with Chrysler? I don't perceive that to be the case. Other than tech transfer and a few shared platforms, I don't think the public has had much to remind them that Merc and Chrysler were joined at the hip.

I think Merc is in a good position to go back to doing what they do best, unencumbered by the sad story that is Chrysler. Can't imagine sales dropping out of spite...

[Brookside]

Remember those Chrysler ads with Herr Zetsche?...the one with him and the Hemi guy was hilarious.


and also these with the "pesky reporter".

But no I don't think there was the synergy people hoped for...a Mercedes with a Chrysler price tag...I think everything Chrysler got was hand-me-down platforms...bad timing, bad deal all around.
Everybody lost.

[PACIFICONE2003]

I think everyone lost on this deal. I have a friend that worked on the Chrysler line. In his words, Mercedes came in, took all the cash, invested into their plants leaving Chrysler with an empty shell. My friend took the $100K buy-out last month. He didn't want to wait around to be laid off.

[spudw]

That Charger is one handsome car, though. The Charger and the 300 are probably two of the most appealing American sedans out there. Nothing from GM or Ford really compare in terms of design and aesthetic impact.

Too bad they're not German ... anymore:biggrin:... But seriously, it would be a shame to see the end of those two models, in particular.

[Brookside]

Originally Posted by spudwest

But seriously, it would be a shame to see the end of those two models, in particular.

Hemi-Guy and Herr Zetsche on the set.

Hmmm...wonder how Hemi-Guy's taking the news...maybe better than most other Chrysler workers.

[BForbes]

I'm quite fond of Mercedes so hopefully this is good for them. In the past 12yrs I've had 3 Mercedes and 2 BMW's in my immediate family. I like them both. BMW has to be my favorite because its more driver orientated. Mom always drove the Benz and Dad the BMW or an SUV. But like someone said, they cater to a different people. Personally the fit and finish in the Benz easily masters the BMW. Its like comparing white wine to red wine. Most bmw drivers wouldnt trade there car for a benz and vice versa. My top 2 fav. German car companies would be Benz and BMW.

btw, i agree with Spud. I personally like the Charger, especially equipped with the HEMI.

[Brookside]

Originally Posted by onehots2k

I'm quite fond of Mercedes so hopefully this is good for them. In the past 12yrs I've had 3 Mercedes and 2 BMW's in my immediate family. I like them both. BMW has to be my favorite because its more driver orientated. Mom always drove the Benz and Dad the BMW or an SUV. But like someone said, they cater to a different people. Personally the fit and finish in the Benz easily masters the BMW. Its like comparing white wine to red wine. Most bmw drivers wouldnt trade there car for a benz and vice versa. My top 2 fav. German car companies would be Benz and BMW.

btw, i agree with Spud. I personally like the Charger, especially equipped with the HEMI.

The Z-man, Richard Petty, and the Charger


I'm not particularly fond of Benz the company..even tho no one has said that ethics and morality go hand in hand with the capitalist business model,
the Chrysler/Daimler hookup was a bad pairing right from the start.
Jaimie Kittman has a scathing column in the current (June/007) issue of Automobile magazine, saying in essensce, that Daimler sucked Chrysler dry and has left it worse off now than before.

For me, BMW is the only German company that is well run and has a shred of corporate consciousness that can stand up to public scrutiny.
Maybe for most consumers the only thing that counts is the product and to hell with corporate deception and greed-
but I can't bring myself to ever consider buying a Mercedes.

[Brookside]

Fifty, Finned and Fabulous


A 1957 Plymouth Fury, hastily redesigned to leap ahead of its rivals.


Each age is a dream that is dying, or one that is coming to birth,” the poet Arthur O’Shaughnessy wrote. The year 1957 was just such a time.


Humphrey Bogart, Laura Ingalls Wilder, Joseph P. McCarthy, Eliot Ness and Louis B. Mayer died that year. Significant 1957 births included Donny Osmond, Katie Couric, Scott Adams, Bill Ford and Osama bin Laden. The future seemed limitless for the United States. Postwar prosperity seemed as though it could go on forever, and Detroit automakers introduced a lineup of new models that seemed as invincible as America.

“I think 1957 was a high-water mark for Ford design; Chrysler as well,” said Greg Wallace, manager of General Motors’ Heritage Center in Sterling Heights, Mich.

The enduring popularity, not to mention collectibility, of Chevrolet’s 1957 cars “speaks for itself,” he said, adding, “The ’57 Chevy was quite simply the best-looking car of the entire postwar era.”

It was a Golden Era, but a fleeting one. It would end before the year was out.

Fifty years ago, things were very different for the now-beleaguered Ford Motor Company. Ford’s 1957 lineup was all new for the first time in five years. The 21 models included a restyled Thunderbird sports car, a new generation of F-100 pickups, the car-based Ranchero pickup and the Fairlane 500 Skyliner — the first American convertible with a retractable hardtop. Sales were way up — so much that Ford outsold Chevrolet for the first time since 1935.

Together, Ford and Chevrolet accounted for fully half of American car production.

The public viewed the Chevys and their General Motors siblings as somewhat dowdy compared with competing 1957 cars. Critics derided the G.M. designs as passé because they were essentially makeovers of the 1955-56 models, with high rooflines, voluptuous fenders, short wheelbases and stubby overall lengths — the shoebox look favored by G.M.’s styling czar, Harley J. Earl.

The future had already arrived at Chrysler. “Suddenly it’s 1960!” declared ads for Plymouth, which displaced Buick as America’s third-best-selling line of cars. New models advertised in Chrysler’s Forward Look campaign that were designed by Virgil Exner, the automaker’s chief designer, were trumpeted as “three years ahead of their time.” They essentially were.

Chrysler’s president, Tex Colbert, was smarting from poor sales of the company’s 1956 lineup when he came across the futuristic advance designs for 1959 and ’60 models that Exner was working on. Eager for a fresh start, Colbert reportedly told Exner, “Let’s build those” for 1957. The ’57 models that had been in the works were scrapped.

The 1957 Plymouth, Dodge, De Soto and Chrysler models trumped everything else on the market. For starters, they were five inches lower than the previous year’s models. They were also wider. Advertising claims (“longer, lower, wider”) notwithstanding, they weren’t really longer than the ’56s, but the sleek models looked as if they were. Credit the fins. Exner’s ’57 designs featured massive steel wings that seemed ready to propel these two-ton creations into the stratosphere. But of greater importance were landmark mechanical innovations like torsion-bar front suspensions, highly reliable three-speed Torqueflite automatic transmissions and Hemi V-8 engines that were power-rich yet fairly economical.

“But the real feature of Chrysler’s ’57 cars was that these cars embodied the future, an optimistic, Eisenhower-prosperity future where people wanted to go, and go quickly,” Jeffrey I. Godshall, a Chrysler designer, author and automotive historian, wrote in an e-mail message. “The Forward Look cars indeed looked forward to a futuristic Jetsons’ world of high technology and increased leisure time. The perfect world Americans felt entitled to.”

And what was speeding them to that idyllic Tomorrowland? Vehicles like the Chrysler 300C, with its 375-horsepower, 392-cubic-inch Hemi, the industry’s most powerful engine at the time. (Horsepower was calculated more liberally back then.)

By comparison, Ford’s 312-cubic-inch V-8 made only 245 horsepower, although an optional supercharged version produced 300. The small-block Chevrolet V-8 had its displacement increased to 283 cubic inches, but base horsepower was just 185. However, for the first time on an American production car, fuel injection was offered. That helped to raise horsepower to 283 — the first time an American manufacturer had been able to achieve one horsepower for each cubic inch of displacement, the company said.

But the fuel injection system was touchy, and dealers didn’t know how to work on it. Many dealers replaced the system with a carburetor. The supercharged Ford 312 was gone after just one year.

Jerry Garret NYT

More:http://www.nytimes.com/2007/05/20/au...es/20FIFTY.htm