DaimlerChrylser merger on the rocks?
Will the departure of Jurgen Schrempp last week, it's time for talk about a break-up of the DaimlerChrysler marriage to heat up once again. BusinessWeek thought enough of the topic to make it a cover story this week. The last time the issue was raised, it was due to the poor performance of the Chrysler group, but now it's Mercedes that's fueling the discussion. Spinning off Chrysler would allow the Daimler organization to focus on rebuilding the Mercedes brand. But it's also possible that shareholders are looking at this with the thought that the sum of the parts of DaimlerChrysler is worth more than the whole, and therefore some sort of split would benefit them. The "breakup value" of DC might be worth as much as twice its current market capitalization, but could each company survive on its own? A newly solo Chrysler might not survive its next downward turn, and Mercedes is currently bleeding money, which means it's difficult to fund future development work without supplimental income from the profitable units. It would seem prudent at this point to let Dieter Zetsche do his thing and attempt to turn around the whole corporation.
Reader Comments (Page 1 of 1)
Mal Fuller 10:25PM (12/18/2005)
DCX has worked better for the Chrysler side than I ever thought it would. At this point I don't think a split would be good for either D or C. Upturns and downturns are a fact of life for automakers. Most top brass know this and, therefore, they don't panic. I VERY much doubt there will be any near future split at DCX. Mercedes has allowed their fellow European competition and their Asian competition to better them product wise. They'll just have to wake up and answer their competition.
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iQuack 10:25PM (12/18/2005)
My guess is no split. If there were a split, Chrysler would eventually be bought by another company.
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md 10:25PM (12/18/2005)
I'm no economist or business expert or anything like that, but this a split up does not seem to make sense. Chrysler is using a lot of mercedes parts and engineering and as a result their quality is up, they are putting out desirable products and are selling more cars. the sales may not be astonishing, but they are being noticed finally. Mercedes is not doing so well, so maybe a little of the cash the chrysler group is making can go toward getting Mercedes back in line.
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Sid Ghosh 10:25PM (12/18/2005)
Why would they split now? Mercedes is just getting ready to re-new almost all of it's product line-up. And the future for MB is looking really good. With BMW and Audi both becoming more boring, this is Merc's chance to offer Acura-esque luxury/sport machines. The CLS is a great step. The next gen C-Class images look fantastic.
Chrysler is doing better than ever before.
DCX may have troubles, but their future looks VERY bright if they stay the course.
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JG3 10:25PM (12/18/2005)
Chicken Little must be writing for BusinessWeek.
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olderty 10:25PM (12/18/2005)
It's not (that) broke, so why fix it?
They're doing better than Ford and GM...
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