Daimler-Benz’s purchase of Chrysler was one of the major mergers in the history of automobile companies. On May 7, 1998, the two companies announced that in the coming years, they intended to form the world’s leading automobile corporation (Mosley, 2019). The merger took place for the willingness of both manufacturers to strengthen their economic positions. Major financial challenges put a strain on the car industry in the U.S. during the late 90s, causing many producers to halt the vehicle assembly process (Mosley, 2019). In addition, the excess production capacity of numerous automakers, the strengthening of customer positions, and the growing environmental awareness have jeopardized the presence of many car manufacturers in the market. As a result, Daimler-Benz, having a larger financial capacity, decided to purchase Chrysler pursuing to fulfill the common needs.
Another major reason for merging the companies is the desire to expand in size. Before the deal, Daimler-Benz was already a large corporation, owning patents to many car models in Europe. However, it owned only one percent of the shares in the automobile market in the United States. Nonetheless, throughout its existence, the company was characterized by its efficiency and skyrocketing advances (Mosley, 2019). In the meantime, Chrysler was unequal in size and owned 23% of shares in the U.S. which made the corporation attractive for concluding a merger (Mosley, 2019). Both companies decided to unite to capture the car market worldwide, yet they faced severe organizational challenges.
Primarily, there was a surge of internal rivalry since the majority of employees had to integrate the professional duties imposed by the previously rival company. Moreover, the administrative pressure of the Germans led to an impasse on key issues of operation and integration of Chrysler’s capacities. It was the clash of cultures that impeded collaboration. The Americans encouraged creativity among the staff, whilst the Germans promoted a methodical approach, which meant adhering to the standards. Daimler-Benz approached the decision-making process with bureaucracy and authority, whereas Chrysler empowered employees’ involvement and implementation of the new ideas. These organizational challenges resulted in the outcomes nobody expected to receive.
After the merger was announced, many analysts rejoiced, calling the $36 billion deal a success. As a result of a complex and confusing game on the stock markets with mutual penetration and the transfer of shares of the concern from hand to hand, Daimler remained the main payer of the transaction. The alliance has become a classic example of global industry consolidation and covered all major consumer segments. It seemed to many that their lucky ticket was acquired not only by Chrysler, which received unlimited access to advanced German technologies and the European market (Mosley, 2019). Daimler, for which an unprecedented leap and expansion of influence in the largest North American market at that time played a huge role, also aimed to succeed. However, a powerful stream of organizational, ideological, infrastructural, tactical, and strategic mistakes stood in the way of integration, which led to major conflicts between the two organizations and their governing structures.
Nowadays, Daimler-Benz is the world’s top luxury car manufacturer. Recently, the CEO of the company renamed it Mercedes-Benz, and the corporation’s main focus now is the production of electric vehicles. Meanwhile, Chrysler became a part of Stellantis, a conglomerate of car brands, to develop automobiles in partnership with other major automakers such as Fiat, Jeep, and others. Both car manufacturers are still thriving and produce high-quality vehicles.
Mosley, M. (2019). The failed merger of Mercedes & Chrysler. Mistakes Were Made.