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Daimler Chrysler Merger Essay

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Daimler Chrysler Merger

Daimler Chrysler is the result of merging Daimler-Benz and the Chrysler Corporation in late 1998. The merger was to be one of the largest on record, and the beginning of a new wave of mergers sweeping through the automotive industry.

Although the companies were manufacturing generally similar products, the differences between those products could not be wider. Chrysler was known for a product line consisting of mini-vans, light duty trucks, and four-wheel drive off-road vehicles; Daimler-Benz was known for its luxury brand of Mercedes-Benz vehicles and medium and heavy-duty over-the-road trucks. Merging the two companies entertained the idea of one entity possessing a product line covering …show more content…

Revenues have increased sequentially more than that of rivals GM and Ford, but gross margin, 16.98% lags both GM, 20.07%, and Ford, 20.24%. Return on Equity, 5.8%, lags Ford’s 18.6%, and GM’s 14.8%. Return on Investment, 2.01%, trails the industry average of 2.91%. Return on Assets, 1.2%, is in line with GM and Ford, 1.5% and 1.2%, respectively. Market Value Added was over €65B for FY ’98, dropped to €42B in FY ’99, and by FY ’00 was (€1.2B).

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The Chrysler division continues to suffer from the weak North American economy. In response to weak sales, tough economic conditions, and lagging fiscal performance, Daimler Chrysler asked suppliers for one-time 5% cost reductions.

Although synergies are anticipated to reduce costs by €3B over the next 2-4 years, it seems more could be done. The “bible” could be revised to realize engineering synergies between the divisions without degrading the brand recognition of Mercedes-Benz. The result could be a decreased “lead time,” and higher quality products on the Chrysler side. Some common platforms could be utilized, matching the highest-line Chrysler products with the lowest-line Mercedes-Benz products, thereby decreasing production costs while maintaining quality. Since SUV’s represent products produced by both the Chrysler and Mercedes-Benz lines, some common drive trains and assembly plants could be utilized. Further savings

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