Chrysler finds a future at the gates of hell

Daimler – Benz was finally able to find a good buyer for Chrysler. Cerberus, an investment company named for the mythological multi-headed monster-dog that guards the gates of hell, agreed to take Chrysler off Daimler’s hands for $7.4 billion.

It’s not actually a total “see-ya” for the companies that joined last decade, more a divorce with joint custody of the children. Daimler Benz (aka Mercedes) retains around 19 percent ownership, which ensures shared components and current joint manufacturing of products aren’t jeopardized.

It was sharing that made the original deal look so good to the boys in Deutschland. Everything made so much sense about a DaimlerChrysler marriage – Mercedes would expand its distribution and plant system in America and Chrysler would improve its quality and engineering. Ahh, if only it had worked that way. Sadly, when Mercedes woke up in the morning with the ring on its finger, it found Chrysler to be ugly with inefficiencies, organizational bloating and disorder, and hidden financial problems.

Instead of bringing Chrysler, Dodge and Jeep quality up, Mercedes’ quality went south. By 2002, Mercedes was ranked among the worst-quality vehicles within its home market (second to last, in front of Fiat,) despite being ranked at the top for image and prestige. Much of this had to do with Mercedes integrating new computer technology in its cars (as did BMW with similar results,) but the mess at Chrysler had the company taking its eyes of the ball.

As for all of the promises of great technology sharing, German-made Chryslers like the Crossfire demonstrated all the success of the Hindenburg.

It wasn’t all bad. Sharing switchgear, suspension and other parts didn’t help the Chrysler division’s profits, but it did help make cars better. Chrysler managed to get its once-per-decade accolades for design with the 300C / Charger. (Remember the “cab-forward” LHS/Concorde/Intrepid family of the 1990s and K cars of the 1980s?) Unfortunately, the rebirth of the Hemi-powered Chrysler and Dodge sedans was offset with other underwhelming products at Jeep (Commander, Patriot), Chrysler (Aspen), and Dodge (Caliber, Nitro).

The market is very happy to see the buyout. DCX stock surged once rumors started that Chrysler was on the block. Since the buyout announcement, the price is still up a few bucks.

Cerberus says it plans to run the company with a hands-off approach. They also plan to invest in the company to expand product lines and increase Chrysler/Dodge/Jeep’s presence in Europe.

Hopefully Cerberus’ experience guarding the gates of hell will allow it to face Chrysler’s big financial and executive leadership problems without fear. With some good vision, strong financial decision-making and smart product management, Chrysler could soon be the best positioned domestic auto manufacturer.

And without the Chrysler noose around its neck (although it will maintain some of Chrysler’s debt in the deal,) Mercedes can continue its march to be the world leader in diesel-powered cars…while also giving its investors something to smile about.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: