Daimler-Chrysler: Why the Marriage Failed

By Michelle Krebs May 17, 2007

Marriage metaphors abound in the breakup of Daimler and Chrysler. Indeed, any divorce prompts an analysis of why a marriage failed.

DaimlerChrysler CEO Dieter Zetsche says no one is to blame, including the United Auto Workers union. In various interviews published today, Zetsche claims the UAW’s unwillingness to grant health care concessions to Chrysler as it did to General Motors and Ford was not the reason for the breakup. “This did not affect our relationship and this did not lead to the final decision,” he insisted to the Detroit Free Press.

Instead, he said, the relationship started unraveling a year ago. When he was promoted from Chrysler CEO to DaimlerChrysler CEO, he said he had intended to create more partnerships between Chrysler and Daimler but found limited overlap because of Mercedes’ premium position and Chrysler’s mainstream one.

Chrysler CEO Tom LaSorda said roughly the same thing at his Tuesday press briefing. Top-level management overestimated the synergies between Chrysler and Mercedes.

Doomed From the Start

AutoObserver’s take is the marriage was doomed to fail because it was built on sand, not on a solid rock foundation. It missed a basic building block from the start: honesty. From the start, the leaders of the two companies billed the so-called marriage as a merger of equals. That was a scam. Chrysler was bought and was subsequently treated like a stepchild, not a partner. The domination by one partner over the other filtered down through the rank and file.

The marriage was based on ego –- the egos of the two men at the top of the companies at the time who got rich on the deal -– not compatibility.

Cultural differences made it even worse.

The relationship lacked commitment. Many on the German side saw the marriage as only temporary and behaved as such.

Finally, the relationship lacked vision and leadership to make it work. Employees didn’t know what the relationship was supposed to look like in the end. Leadership didn’t draw the picture, nor did they encourage the two companies to mesh.

Could it have worked? It could have worked if leadership had sold the family on why the marriage was necessary and demonstrating how both would be better off as a result of their union. It could have worked if everyone understood what the vision down the road was. It could have worked if both sides had found common ground beyond their cultural differences (the unlikely pairing of Japanese Nissan and French Renault have proven that). Differences could have been overcome with more exchange of personnel to show them on a personal level that they had more in common than not.

A compelling joint project would have helped. Auto companies often put young, up-and-coming engineers on racecar teams with seasoned veterans to build camaraderie in a mission in which the goal is clear and teamwork is required.

As divorces always are, Zetsche described this one as a personal emotional rollercoaster. Zetsche’s affinity for Chrysler has always been obvious. He told The New York Times, “The five years I spent in Auburn Hills (Michigan) were professionally and the most satisfying years I spent anywhere.”

All sides claim valuable lessons were learned. Hopefully they won’t soon be forgotten as future relationships develop.

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xcargrl says: 8:39 PM, 05.18.07

Your analysis and comments on the "marriage" underscore the importance of intercultural communication training, on all levels. Cross-cultural awareness skills enhance one's ability to work together on goals and objectives after such a merger of global corporations. Management must be personally committed to this mission and demonstrate their commitment regardless of ethnicity. Obviously, in the case of DaimlerChrysler, the values and goals of one group were held in higher esteem. I love your review. It is very insightful!

Dale Crockett says: 2:52 AM, 05.21.07

Well, another situation that wouldn't EVER work has come home to roost. I hope Robert Eaton is feeling really good, these days. Chrysler is a good company, and can be a great company. I hope the management, under former secretary Snow, has the willingness they claim to have. That's a lot of money, and more important, a lot of people's jobs, they are entrusted with. Go for it, you guys!


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