Speculation is rampant about the possible/pending divorce of
Daimler from Chrysler.
Nothing definitive, but no outright denial from DaimlerChrysler
CEO Dieter Zetsche, either. “All options are on the table,” the
good Herr Dr. Professor replied when a direct question was tossed
his way.
That tells you all you need to know, really.
The so-called “merger of equals” (it was in fact a takeover,
with Daimler simply buying a controlling stake in the formerly
independent number three U.S. car brand) seems not to be working
out as envisioned — meaning there’s not as much profit margin left
in Chrysler’s passenger car portfolio to funnel into the pockets of
Daimler Ag as the Germans had hoped for. Although there was back in
‘98 — when the “merger” took place. What happened to it all? A
large chunk undoubtedly went to help the Benz side of the business
expand — which it has done copiously since then. Nine years ago,
Mercedes was a luxury car line — but not a full line. Today it
sells expensive minivans and SUVs (R-Class, GL-Class, M-Class) as
well as a litter of sedans and coupes in all sizes and price
points. Wonder who paid for all that R&D?
But now that the spigot’s drying up, Daimler is thinking it’s
time to cut bait and flee — before it ends up shelling out more
than it can pick off the corpse, so to speak.
The Germans are probably worried more than anything else about
Chrysler Corp’s various liabilities. Everything from health and
pension obligations (the same issues plaguing Ford and GM) to a
surplusage of old/unused/little-used factories and other
cash-sapping “assets” the Daimler muckety-mucks would rather simply
give the old heave-ho to than have to deal with (and pay for) over
the coming years.
That’s understandable.
But this is one instance where an ugly divorce might end up
being a positive thing.
Whatever problems Chrysler has, they’re not due to lackluster,
unappealing cars. Okay, so the 300 and Charger sedans (shared
platform with the current Benz E-Class), Magnum wagon, Pacifica
crossover, Crossfire coupe (Benz SLK) and so on haven’t been
stupendous sales successes. But there’s no denying these are
exciting, distinctive cars that draw attention — a necessary first
step along the road from red ink to black.
Moreover: There’s a gorgeous new rear-drive Miata-fighting
roadster on deck (Dodge Demon) for next year. And the recently
re-tooled Jeep Wrangler has been doing gangbusters. People seem to
like the little Caliber, too (and its hunky cousin, the Dodge
Nitro). Sometime in mid-late 2008, Dodge will unveil an
all-new/updated version of the Viper supercar that should be able
to slap any Porsche (or Corvette) into next week.
So this isn’t AMC in 1975 — all Matadors and Gremlins and
Pacers. Nor even Chrysler in 1981. The core product is worthy. No
need for the defibrillators — or a complete makeover. Build great
cars and the rest often takes care of itself.
ENTER GENERAL MOTORS — and the much-talked-about possibility of a
second marriage for Chrysler to America’s still number one (just
barely) automaker.
The logic is simple, when you think about it.
One, GM is about to be supplanted by Toyota as the world’s
largest automaker. Barring a catastrophic dip in Toyota’s fortunes
(and an equally abrupt upswing for GM) this is an inevitability. A
partnership with Chrysler could stave that off for at least a
couple of years — allowing GM to retain its title (and the
prestige that goes with it) for perhaps long enough to fix the
underlying structural and product problems that threatened to lay
it low — while assimilating the best elements of Chrysler into
itself, sort of like the Borg in TV’s Star Trek: The Next
Generation. (But in a good way.)
Make no mistake, GM’s slowly turning things around. Cadillac is
healthy (and better yet, hip) for the first time in 10 or 20 years.
Saturn — and specifically, the new Aura sedan and Sky roadster —
has defied the mortician’s premature tape measuring. The Chevy
Silverado pick-up is nipping at the heels of the Ford F-truck —
and could possibly catch it as the number one selling vehicle in
the American market. The new pack of rear-drive Pontiacs (G8, etc.)
seem like winners.
But what would Chrysler bring to the table? Economies of scale,
for one. The buying power of GM is already formidable; add Chrysler
and the margins go down some more, making it possible for GM to
squeeze a few more bucks out of each vehicle sold.
But the biggest argument in favor of a merge may simply be
consolidation — and the elimination of a domestic competitor for
both GM and Chrysler. Such a partnership would allow the combined
entity to turn its full attention on the Japanese — and to get
ready for the coming onslaught of Chinese cars, which may be
unloaded en masse at vending machine prices through big box
retailers like Wal-Mart and Costco.
There is strength in unity. And bigness can be a huge advantage
all by itself.
WHO KNOWS? MAYBE FORD will join up, too — creating an American
Automotive Entente for the 21st century that could be the only
realistic hope of dealing with the homegrown problems of finding a
way to pay all those promised bennies to current and long-retired
employees — and of mounting an effective resistance to the
seemingly unstoppable juggernaut from Asia.
Let’s face it: The auto industry is already global in all but
formality. You’re as likely to find German (or Japanese) warning
stickers under the hood of your ‘07 “American” car as you are
English ones.
Or maybe “Hecho en Mexico.”
Maybe regional mega-blocs are the future. Maybe they are as
inevitable as the free and fluid movement of money and people
across international borders.
Why not make it official? Or at least, profitable.
This is just what they may be pondering right now in Auburn
Hills — and on the top floors of the Renaissance Center (GM’s HQ)
in downtown Detroit.
As the Borg from Star Trek liked to say — “Resistance
is futile”!
