Taken For A Ride

How the DaimlerChrysler "marriage of equals" crumbled

It was the deal heard 'round the world. In May, 1998, a stunning $36 billion merger was announced by Daimler Benz, the German manufacturer of Mercedes-Benz luxury cars, and Chrysler Corp., the all-American maker of minivans and Jeeps. The marriage of Daimler and Chrysler promised to rock the global auto industry and provide a blueprint for international consolidation on an epic scale.

But the union didn't turn out to be a merger made in heaven. When the dust settled, Daimler was firmly in control of Chrysler, and the shock waves were reverberating on both sides of the Atlantic. An American icon would lose its independence, and a German giant would grow in power and influence. Daimler chief Jurgen E. Schrempp grabbed the wheel of DaimlerChrysler. His co-chairman from Chrysler, Robert J. Eaton, took a back seat. And Thomas T. Stallkamp, Chrysler's president, got caught in between.

The lofty expectations of management, employees, and shareholders would be dashed in DaimlerChrysler's first year. The challenges ahead became crystal clear at the first meeting of the global management team, just a month after the deal was completed.

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