Juergen Hubbert, Daimler-Benz board member with responsibility for passenger cars; Dieter Zetsche, Daimler-Benz board member for sales and marketing; Helmut Petri, Daimler-Benz board member for r&d; and Robert Eaton, Chrylser Corp. chairman, were interviewed by reporters and editors of Automotive News Europe. What follows is an edited transcript.
The state of the merger
Hubbert: The first day of operations, or 'Day One,' will likely be in mid-November.
We have had discussions and meetings and we have announced 100 projects, which we will start immediately after Day One. The 100 projects are in all segments - from r&d to production, sales, human resources and legal.
We have defined what we want to do in 1999, 2000 and 2001 on both sides.
Why Daimler chose Chrysler
Hubbert: The geographical overlaps are smaller than they would have been with any other partner. Secondly, in the past few years Daimler-Benz has become the most American-thinking corporation in Europe.
Chrysler, on the other hand, is the most European-thinking company, and is process-oriented and really focused on product development.
Zetsche: The No. 1 reason by far for choosing Chrysler was because there was no product overlap. The two companies also fit well on a regional basis. They are strong in the USA; we are strong in Europe. We both have some work to do in Asia.
Zetsche: It's a good fit, because as a premium manufacturer we develop new ideas and bring them to market. Our problem has been that costs are high for these new technologies because of our low volume. We always lost the technology to competitors because our good friends at Bosch (German auto supplier Robert Bosch GmbH) said we didn't give them the numbers they wanted.
Like with the Electronic Stability Program, we wanted one year of exclusivity; Bosch gave us three months, and we had to fight for it. Chrysler will give us the volume. We can stay No. 1 in developing technology - and take it as soon as possible to Chrysler.
Petri: We started offering the window airbag only this year on Mercedes-Benz cars. Now we can start to offer it on Chrysler vehicles, perhaps not next year, but over the next five years.
Eaton: Mercedes-Benz can help us with our quality. (One example: On stampings for door panels, Daimler gets tolerances of plus or minus 0.25mm; Chrysler accepts plus or minus 1mm. Another example: Daimler pays no more for its dies, so Chrysler can learn to use dies better.)
Zetsche: We think there is potential for the Chrysler organization's performance to be further developed in Europe. There may be something we can learn from the strength they have in their home market.
In the USA, we are performing close to the maximum now.
Eaton: Daimler will not take a minivan off the Chrysler platform. (But Chrysler engineers will help to develop a Mercedes minivan that could share some components with Chrysler. Before the merger, Daimler planners were working on a minivan project.).
Petri: (Chrysler can help Daimler create a minivan's front-wheel-drive system and) 1,000 other things.
Petri: There will be no platform sharing. We can share parts and components, but we won't share platforms.
Zetsche is in charge of studying all the brands of the two automakers. He said he is working with Jim Holden, Chrysler's executive vice president of sales and marketing, and Ted Cunningham, executive vice president of international operations, on the proper brand positioning for all Chrysler and Mercedes-Benz products, including the Smart car.
Hubbert: The major priority is to organize the brand portfolio of DaimlerChrysler and to position the brands against each other with Mercedes and Smart on one side and Chrysler, Dodge, Plymouth and Jeep on the other. We also want to describe the product portfolio and what brands and products to sell in which countries.
Zetsche: To go into Europe with all four Chrysler brands and to sell all of their existing products here would be very costly.
You either decide that you don't need some products, like pickup trucks, in Europe, or you consciously accept that you won't sell some Dodge products here.
Chrysler and Jeep products have different images in Europe. Jeep is well known. But the Chrysler brand wasn't until the merger was announced. They put Chrysler and Jeep products into one franchise to make the customer believe they were one brand. This is the kind of thing we have to change. We also have to determine whether we want to invest the kind of money needed to separate the brands.
Combined Chrysler and Mercedes-Benz showrooms
Eaton says it will not happen. In emerging markets, wholesale and retail operations could be combined - but showrooms would probably be separate and keep their autonomy.
Basic salaries of top executives are roughly comparable, but Chrysler executives earn many times more through stock options, which were legalized only recently in Germany. (Eaton will collect
$69.9 million in cash and stock as a result of the merger.)
Eaton said DaimlerChrysler shareholders will determine whether and how to extend stock options to all DaimlerChrysler executives.
As for pay for the rest of the employees, Eaton said, 'For 99 percent of the people, nothing changes. You can't afford to pay above market; you can't afford to pay below market.'
An American who transfers to Stuttgart temporarily will receive American pay. A permanent transfer will switch to German pay.
Buying a Japanese carmaker
Hubbert: We need something in this area. We can do it ourselves and put a product together and produce it or we can buy someone.
At the moment, we have so much to do to make this merger a success that it would be crazy if we acquired a Japanese company now.
Eaton: We've got plenty on our plate right now (with the DaimlerChrysler transition).
The timing's not right. (However,) we know we need products down to (engine displacement of) 600cc. We can do them ourselves, do a joint venture, or acquire somebody.
Eaton: On Day One, we will have $20 billion in cash.