CBC Archives

You must sign in to leave a comment on this clip.

Daimler and Chrysler: 'a merger of equals'

Broadcast Date: May 7, 1998

It is being billed as the biggest industrial merger of all time. On May 7, 1998, Germany's Daimler-Benz and the U.S.-based Chrysler Corporation announce a merger that they say will create the first truly global automaker. Although the German company is bigger, the marriage is being touted as "a merger of equals." As we hear in this clip from CBC Radio's The World at Six, the announcement is met with almost universal enthusiasm.

Daimler and Chrysler: 'a merger of equals'

• Daimler has been making cars and trucks in Germany since the late 1800s, including their most storied product line, Mercedes-Benz. When Daimler-Benz formally joined forces with Chrysler in November 1998, the new entity was named DaimlerChrysler.

• When the $36-billion US merger with Chrysler was announced, Daimler head Jurgen Schrempp said it would produce the world's most profitable automaker. But in the years that followed, the optimism quickly fell. Chrysler remained unprofitable, and the task of integrating a luxury carmaker with a mass-market brand seemed insurmountable. As the two management structures clashed and U.S. car prices dropped, many on the Daimler side began to see the merger as what Business Week called "a colossal mistake," with Mercedes acting as the profit engine and Chrysler "its dragging muffler."

• On the Chrysler side, the new operation looked nothing like a "merger of equals." Detroit soon took a backseat to Stuttgart in decision making. In 2000, Schrempp revealed in German and American financial journals that he had always viewed Chrysler as a subsidiary. "The 'merger of equals' statement was necessary in order to earn the support of Chrysler's workers and the American public," he said, "but it was never reality."

• A class action suit led by billionaire shareholder Kirk Kerkorian claimed Daimler misled investors, and the company should have paid a takeover premium. Daimler settled for $300 million US in 2003.

• In May 2007, DaimlerChrysler announced it would sell off a 80.1 per cent stake in the Chrysler arm to the equity firm Cerberus Capital Management. The sale was completed in August and the companies split into Daimler AG and Chrysler Holding LLC.

• Cerberus paid $7.4 billion US for Chrysler — a far cry from the $36 billion Daimler paid nine years prior — and none of the money went to Daimler; it was all invested in Chrysler operations. In reality, Daimler ended up paying out close to $650 million to dump Chrysler. It was, to quote CNN, "the most expensive one of the least successful mergers in auto history."

Daimler and Chrysler: 'a merger of equals'

Medium: Radio

Program: The World at Six

Broadcast Date: May 7, 1998

Guest(s): Dennis Desrosiers, Robert Eaton, Buzz Hargrove, John Manley, Jurgen Schrempp

Host: Bernie McNamee
Reporter: Michael Colton

Duration: 2:41

Photo: Workers carry a new DaimlerChrysler sign to replace the old Daimler-Benz plate following the merger of Daimler and Chrysler, at the carmaker's headquarters in Stuttgart, Germany. Thomas Hoerner/Associated Press, file photo.

Last updated:
May 4, 2009