| Back in 1998, experts called Daimler and
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| | People close to Zetsche said that he
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| Chrysler's union a marriage 'made in
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| | truly believed that Daimler could become
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| heaven.' But about a decade after, the
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| | an integrated powerhouse if Mercedes and
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| perfect union has reached a critical
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| | Chrysler shared more engineering costs
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| juncture. How did the union hit the
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| | and high-volume parts. He strived hard
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| rocks?
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| | for more cooperation, and initiated the
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| On Sept. 15, DaimlerChrysler AG's CEO
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| | development of common platforms for
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| stunned the world by forecasting a $1.5
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| | small-car and SUV product lines.
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| billion third-quarter loss for the
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| | Nonetheless, the joint projects only
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| Chrysler Group. The executives know they
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| | underscored the huge differences between
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| are all in trouble but nobody has ever
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| | a Mercedes and a Chrysler. While
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| imagined how grave the trouble could be.
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| | engineers could unite, they could not
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| After a number of profitable quarters,
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| | change the fact that a small Mercedes car
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| Chrysler had collapsed inwardly. Its
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| | sells for double the price of a Chrysler
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| erratic sales performance triggered
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| | compact.
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| Daimler's decision to sell it off before
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| | Many Mercedes auto parts were simply too
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| it capsizes the whole company. Chrysler
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| | expensive to be part of a Chrysler
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| would be sold for $7.4 billion to
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| | vehicle. Still, Zetsche insisted. One
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| private-equity giant Cerberus Capital
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| | German exec recalled challenging the idea
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| Management.
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| | that integration could work. "Thank you
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| But with the said decision, pressure
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| | for your opinion," Zetsche told him. "I
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| intensified. It does not only mark the
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| | have a different one. We will go on with
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| failure of a merger but also includes a
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| | the cooperation."
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| bunch of other struggles. Inventories of
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| | While Daimler struggled to solve its
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| unsold product lines were suffocating the
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| | Chrysler problem, the company's
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| dealers. Also, negotiations on the new
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| | shareholders were swiftly losing
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| company policies are choking workers. "It
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| | patience. Influential shareholders
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| shows the problems of the fusions of big
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| | pressed Zetsche and Bodo Uebber,
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| companies," said Willi Diez, the head of
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| | DaimlerChrysler's chief financial
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| the Germany-based Auto Industry
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| | officer, to sell Chrysler. "Zetsche's
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| Institute. "You have cultural
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| | pressure comes from so many different
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| differences. You have the problem of who
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| | constituencies telling him they're sick
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| really runs the company."
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| | to death of Chrysler," said John Lawson,
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| In interviews with a number of
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| | a London-based analyst at Citigroup.
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| individuals close to Daimler to
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| | In private, Zetsche was ratcheting up the
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| reconstruct pivotal events leading up to
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| | pressure on LaSorda and his team. No one
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| the May 14 sale of Chrysler, most spoke
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| | felt the pressure more than Joe
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| on the condition of anonymity.
| |
| | Eberhardt, a former Mercedes exec who was
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| When Zetsche became Daimler's CEO, no one
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| | in charge of Chrysler sales and
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| thought he would sell Chrysler. Like
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| | marketing. Eberhardt had alienated many
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| power antennas, Zetsche was famed for
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| | Chrysler dealers with his autocratic
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| efficiently leading Chrysler's path to
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| | style during the terrible summer of 2006.
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| solidify the merger. But Zetsche became
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| | He resigned on Dec. 5.
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| ultimately disappointed by the lack of
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| | Early this year, Zetsche appeared
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| synergies between Chrysler's mass-market
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| | reconciled that a sale was the best
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| vehicles and the luxury product lines
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| | option. "It took him awhile to get to
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| built by Mercedes-Benz. As a result,
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| | this decision, that it was right for
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| Chrysler inventories became bloated and
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| | Daimler and Chrysler to separate," said a
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| heavy incentives failed to push vehicles
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| | person close to Zetsche. Valentine's Day
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| off dealer lots. The warning on Sept. 15
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| | 2007 was supposed to mark a fresh start
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| turned concerns about Chrysler into a
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| | for Chrysler simply because the marriage
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| full-scale predicament.
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| | was officially headed for a divorce.
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