13. Mercedes Acquired Chrysler To Form Daimler-Chrysler In 1998, And Then Divested From It In 2007, Due To A Corporate Culture Clash With A Cost Of Almost 40 Billion Euros.


Shortly after the merger of Daimler-Chrysler, Jürgen Schrempp (left) was rewarded roughly 1.4 million euros as Daimler CEO, and his colleague from Chrysler, Robert Eaton (right), earned 10.2 million euros. This situation led to new decisions: They should raise German salaries and adjust to the US level. From the beginning, it was obvious German Daimler and American Chrysler were from different cultures, and it would be hard to find a common language.


In February 2000, the first annual report showed the profit of the merged company increased by almost 30 percent to 5.2 billion euros. Chrysler contributed nearly half. Sales increased by a good twelve percent to around 132 billion euros. The expectation was a bit better, but everything still looked neat.


The newly formed DaimlerChrysler AG richly rewarded the shareholders: The dividend was to rise to 2.35 euros per share – almost three times the previous year’s payout. But Daimler-Chrysler’s share price had been moving in only one direction: downwards.


In the next quarter, sales at Daimler-Chrysler were still rising, but the company could only keep the profit level with difficulty. At Detroit-based Chrysler, nothing ran smoothly anymore. Schrempp admitted that Chrysler would drag down the Group earnings in the coming months.

It was publicly clear that mistrust and poor communication dominated the everyday life of German and American spouses.


In the third quarter of the year, Chrysler lost almost 600 million euros. They produced too many vehicles and could only sell them at high discounts. German-born Dieter Zetsche became the new CEO of Chrysler.

Under his leadership, Chrysler was under pressure from Asian car competition and gradually getting better results. In 2005, while Mercedes’s financial performance began to deteriorate, Chrysler contributed an operating profit of 1.5 billion euros to Daimler-Chrysler.


In 2006, things at Chrysler were going down again. High fuel prices reduced American interest in pickup trucks and off-road vehicles that comprised the majority of Chrysler models. Chrysler branch reported nearly a loss of $1.5 billion while the parent DaimlerChrysler had a net profit of $4.3 billion. The group lost its third position to Toyota in the American vehicle market as GM and Ford ranked first and second.


In May 2007, pressure from German shareholders prompted Daimler to sell 80.1% of Chrysler Group to the New York-based private equity firm Cerberus Capital Management for $7.4 billion.

Vehicle sales continued to decline. There were layoffs. The American automaker, losing more than $1 billion monthly, sought financial aid from Congress and filed for bankruptcy protection in 2009.

In 2014, Italian FIAT acquired Chrysler, and the American dream cost Daimler an estimated 40 billion euros.