Richard Johnson
Richard Johnson
Automotive News Print Editor

Lessons learned from DaimlerChrysler

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Every merger or acquisition is a learning opportunity for the auto industry, but no deal serves up as many lessons as DaimlerChrysler. That's why the 20th anniversary of the unveiling of the now defunct and debunked "merger of equals" is an occasion worth noting.

Conventional wisdom is that the combining of Daimler-Benz with Chrysler Corp. failed because of a clash of cultures. But that's an oversimplification. Companies with utterly different national and corporate cultures can thrive together, as shown by the success of Renault and Nissan, Geely and Volvo, Tata and Jaguar Land Rover, and Fiat and Chrysler. In each of those examples, however, a key individual rode herd — namely, Carlos Ghosn, Li Shufu, Ratan Tata and Sergio Marchionne.

DaimlerChrysler missed out on enlightened leadership.

History has it that Daimler-Benz was insensitive to Chrysler's culture as it pushed its people and processes onto the American company. But another theory holds that Daimler failed to go far enough to find synergies and unlock value. This notion is that the Germans should have been less deferential to Chrysler, not more.

In most industries, quick and merciless assimilation of a newly acquired company is best practice.

Yet it was sensitivity to culture, brand and engineering that revived Nissan, JLR and Volvo, even while Renault, Tata and Geely controlled the purse strings and called the shots.

In fact, the disastrous outcome of DaimlerChrysler was because, from the beginning, neither side willingly made concessions.

Egos ran rampant. Indeed, given the false pretense that the two companies were "equal," the merger was set up to fail.

Fortunately, the auto industry has learned from DaimlerChrysler. Among the takeovers that have led to turnarounds in recent years, synergies were realized without trying to jam ill-fitting cultures together. Also, acquired companies have been free to continue doing what they do better than their new owners.

In the flourishing partnerships of the post-DaimlerChrysler era, the rules were established upfront, and egos were checked at the door.

You can reach Richard Johnson at rjohnson@crain.com.

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