DaimlerChrysler rides off into sunset
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The last remnant of the ill-fated "merger of equals" has been put into the history books after shareholders voted to rename the company Daimler AG and the car division Mercedes-Benz Cars, reports Reuters. The company had announced its renaming proposals prior to the start of the shareholder's meeting.
The change of the car division's name to Mercedes-Benz cars was done in part to placate a number of shareholders who felt that Karl Benz's name should be a prominent part of the company's face, which used to be known as Daimler-Benz. The Benz name also appears in the new names of the van division and corporate bank, which become Mercedes-Benz Vans and Mercedes-Benz Bank, respectively.
Other name changes include the renaming of the truck division to Daimler Trucks, bus division to Daimler Buses, and the financial services arm is now known as Daimler Financial Services.
The new smart fortwo gets a BRABUS massage
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It was only a question of time before German tuning firm BRABUS got its paws on smart's new fortwo -- the outfit has done plenty of work on smarts past. BRABUS has worked over the new fortwo's base three-cylinder turbo engine to produce 98 horsepower, a 30-percent power bump that improves the car's 0-to-62-mph run to 9.9 seconds with a top speed of 96 mph, according to the company. Both BRABUS models (base and Xclusive trim levels) are available in coupé or cabrio variants, depending on the equipment line and body type.
Besides the power bump, other BRABUS touches include Monoblock VI alloy wheels, wide rear wheelarches, a sports-exhaust system with centrally positioned stainless-steel tailpipes and a body that's been lowered 10 mm. Also part of the package are specially designed dials in the interior cockpit, sport pedals, and a three-spoke leather steering wheel with shift paddles.
The BRABUS Xclusive fortwo comes with additional equipment such as a front spoiler with enlarged air inlets, H7 projection headlamps with titanium-colored surrounds, side skirts, and a color-keyed rear apron. The heated seats are covered with leather and the leather-effect instrument panel is finished in aluminum-look trim.
Fuel economy is some 45 mpg combined, according to BRABUS, which is still excellent despite the engine upgrades. No official word yet if the BRABUS packages will be available for the U.S. market smarts when they arrive next year.
The prices (ex factory) of the new BRABUS models at a glance, in Euros:
smart fortwo BRABUS
Coupé 16,490 euro
Cabrio 19,430 euro
smart fortwo BRABUS Xclusive
Coupé 19,490 euro
Cabrio 22,430 euro
DaimlerChrysler lasts two years longer than BMW-Rover
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DETROIT - BMW owned Great Britain's last major automaker, Rover, from 1993 to 2000. Daimler bought Chrysler in 1998 and sells it this year. Daimler can deny it all it wants. The two deals are connected.
Merger mania was big stuff in '98, even though BMW was already pretty frustrated with its English Patient. Chrysler was looking for a savior during its latest of many financial downswings. Even with its good-looking front-wheel-drive LH cars in their second generation, Chrysler made profits only on its trucks and SUVs. Bob Eaton must've known back then that cheap gas prices and fat SUV profits couldn't last.
With most of the world's analysts saying that the world's biggest automakers must partner up, Daimler-Benz was looking for something to buy. BMW AG had bought Rover so it would have cheap front-drive cars to sell and keep its premium rear-drive BMWs pure. Mercedes couldn't let BMW do something like that without responding.
The two German automakers do lead each other around. Remember, Mercedes' front-wheel-drive A-Class is considered a production response to BMW's 1991 Z11 concept. Some conspiracy theorists will tell you that BMW showed that car just to get Mercedes to spend money on a small, tall hatchback.
So Daimler buys Chrysler for $36 billion (PR for either brand will, to this day, call it "a merger of equals"). Two years later, BMW unloads Rover Group. It keeps Mini, sells Land Rover to Ford Motor Company for 1.5 billion pounds sterling (nearly $3 billion at today's exchange rates, significantly less back then, but still greater than Chrysler Group's $1.5 billion 2006 loss) and sells Rover to a private consortium for 10 pounds sterling, less a half-billion pound "soft" loan to the Rover factory.
By now investors in Stuttgart are beginning to wonder what kind of mistake DaimlerChrysler CEO Juergen Schrempp has made. Never mind that smart and the AG's stake in Airbus are probably much bigger headaches. But the automaker marches on with plans to build new rear-drive Chryslers out of old Mercedes parts. With Dieter Zetsche running Auburn Hills, Chrysler was the money maker for a short time in the middle of the decade, as Mercedes sunk boatloads of euros into its quality problems, and started to reverse an ill-timed move into lower-priced segments (after all, what was Chrysler/Dodge/Jeep for?).
After Schrempp was ousted and Wolfgang Bernhard was sent packing to Volkswagen, German investors and analysts set their sights on Zetsche, Schrempp's new replacement. By now, Mercedes was making money and Chrysler wasn't. And not incidentally, the Quant Family's BMW AG was rediscovering its ability to make huge profits without Rover's dead weight.
Even those automakers not saddled with a cash-and-oil-leaking basket case like Rover were beginning to understand that mergers and alliances flatten hills as much as valleys. When one of the two automakers is doing well, the other is on the skids. Then they typically reverse positions. Not surprising if the two have different product mixes - usually a good reason to do such a deal - or if key cars and trucks are on different cycles. Look no further than the Renault-Nissan alliance.
With DaimlerChrysler all but divorced and ex-BMW Rover owned by China's SAIC and sold under the brand, Roewe, merger-mania is officially dead. Renault and Nissan are alliance partners. We'll see more of that, although the various ups and downs of each have proven too shaky for superman CEO Carlos Ghosn to handle.
I've talked to a lot of people in the industry about this. They invariably mention Ford Motor Company's purchases of Jaguar, Aston Martin, Volvo and Land Rover as examples of lasting automaker combinations. Even if Ford paid too much for, say, Jaguar and Land Rover, it's not the same. Those luxury brands were never on the same scale as either Daimler or Chrysler. And, of course, Ford would be happy not to have Jaguar, especially, splotching its balance sheet with more red ink.
Think instead of Honda. A few years ago, most analysts saw Japan's number-three automaker as being too small to survive on its own. It would have to find a buyer or a partner or die off, said conventional wisdom. But they passed on buying Rover back in 1993-94 and now, even without volume rear-drive or any V-8s save for racing, Honda's position in the industry is the envy of many of the majors.
Chrysler could do well to emulate Honda as far as its product lineup. Not - I repeat, not - by emulating the kinds of cars and trucks it builds, but by adjusting to a niche-driven market in which the leading automakers have no more than 18 percent market share (and it'll be more like 10-12 percent for Chrysler). It'll be interesting to see whether Chrysler's pending new owners, Cerberus, can pull this off. We won't see any more Chrysler balance sheets until Chrysler Holding LLC goes public or sells off various bits to public companies, but we will see production/sales numbers.
In the end, shrinking Chrysler will be hard to impossible. Hard, in dealing with the United Auto Workers and Canadian Auto Workers. And impossible, in dealing with U.S. Chrysler dealers.
