BRUSSELS - There is little overlap in the product ranges of Mercedes-Benz and Chrysler so the chance of taking sales away from each other is low.
That also means there is little opportunity for rationalizing product lineups or sharing platforms.
Daimler-Benz says it will probably abandon a project to develop a small minivan.
Chrysler can claim world leadership in minivans. It sells more than anyone and builds them in the USA and in Austria in a joint venture with Magna-Steyr.
Daimler's existing six-seat minivan, the Mercedes-Benz V-class, is expected to stay in production. V-class costs are low since it is derived from the Vito commercial vehicle and built at a truck plant.
'I don't expect them to drop it, because the Vito underwrites its production,' said John Lawson, an analyst at Salomon Smith Barney in London.
The new company is likely to further differentiate Jeep and Mercedes-Benz sport-utilities.
'Because of its European roots, the M-class will never be the most muscular vehicle in this segment,' Lawson said.
Jeep vehicles will probably keep their rugged characteristics but add smaller engines to sell in markets outside the USA.
'Chrysler will have to significantly change the chunky drivetrains and the gas-is-no-object approach,' Lawson said.
Mercedes-Benz and Chrysler passenger car ranges in Europe aim for different buyers despite similarities in size and price.
The main technical difference is drivetrain. At Daimler-Benz, only the Mercedes A-class and the Micro Compact Car Smart car are front-wheel drive.
At Chrysler, only the Dodge Viper and Plymouth Prowler are rear-wheel drive.
Chrysler could be Daimler's entry into the small-car market. But there is a big difference between what is classified as a small car in the USA and the rest of the world. The Neon is an entry-level car in North America, but is large compared to most European cars. At 4365mm long, the Neon is nearly as long as a Mercedes-Benz C-class (4510mm).
Neon engines are comparable in displacement with large and luxury cars in Europe.
'The current Neon missed the market in Europe,' said Lawson. 'But these things can be fixed. The fastest way to realize economies in cars may be to share engines. BMW has taken this route with Rover.'
The Neon will be replaced in Europe in two years. It will offer gasoline engines smaller than 2.0 liters, to be produced in a joint venture with BMW in Brazil.
A 1.9-liter diesel engine Chrysler had planned for 2000 has been developed in-house, said Thomas Kowaleski, vice president of marketing and communications for Chrysler Europe.
Daimler-Benz is developing a new family of diesel engines using common-rail technology. It is also developing a new family of V-6 and V-8 engines that could be suited for both Chrysler cars and light trucks.
Putting smaller engines into Chrysler vehicles could solve the brand's image problems in Europe.
'From the point of view of powertrains, Chrysler's US product competes with the European luxury makes,' said Lawson. 'Once you go up to 2.0 liters in Europe, you get into upscale territory.'
Because it lacks small engines, Chrysler has limited imports to Europe. Aside from the Neon, only life-style cars such as the new 300M, Stratus sedan and convertible, and the Viper sports car are sold here.
Chrysler plans to widen its European range, said Kowaleski.
Chrysler vehicles have a shorter life-cycle than Mercedes-Benz products, averaging five years. Mercedes-Benz vehicles have life-cycles of seven to eight years.