Mercedes To Sell Chrysler ????

[hawk20]

New York Times has reported heavy losses at Chrysler, a big slump in sales, and hints that Daimler Chrysler might like to sell it off. Here's a link and a summary of what they say: -

http://www.nytimes.com/2006/10/25/business/25cnd-motor.html

DETROIT, Oct. 25 — Executives at DaimlerChrysler said today that they were working on a plan to return Chrysler to profitability after a loss of nearly $1.5 billion in the third quarter.
But they would not rule out the possibility that Chrysler could be spun off or sold, breaking up the eight-year alliance between the German and American auto companies.
Meanwhile, General Motors provided further evidence that it is gaining traction in its efforts to turn around itself, reporting a loss overall but an unexpectedly large profit from operations for the third quarter today.
Chrysler blamed its loss, signalled a few weeks ago, on slumping sales of a product line that depends heavily on sport utility vehicles and pickup trucks, and on the deeper discounts it has been obliged to offer consumers.
Until today, Mr. Zetsche and other executives always insisted that Chrysler had a safe place in the DaimlerChrysler fold. But when the parent company’s chief financial officer, Bodo Uebber,was asked repeatedly today about Chrysler’s prospects during a conference call with analysts and journalists, he gave cryptic, noncommittal answers.
“We have announced an optimization program; we don’t exclude anything here,” Mr. Uebber said. “We at first are doing the analysis, then we are talking about it, and we draw our conclusions.”
Asked specifically if he had just put Chrysler up for sale, Mr. Uebber replied, “I can only repeat myself — first analysis, second measures, third is conclusion. That is what my statement is.” He added, “Any speculation is what you are doing. I don’t do any speculation.”
Chrysler’s chief executive, Thomas W. LaSorda, who also participated in the conference call, said, “We’ll come back with a detailed plan when we’re ready.”
DaimlerChrysler’s stock price jumped $1.98 to $54.31 a share in midday trading after Mr. Uebber’s remarks.
The Chrysler division shipped just one-third as many vehicles in the third quarter as it did in the third quarter of 2005. Its revenue fell 23 percent to $12.1 billion as it struggled to manage its inventories of unsold vehicles.
DaimlerChrysler, created in a 1998 merger, has been struggling lately to make both its major car making units, the Mercedes and Chrysler divisions, profitable at the same time.
Mercedes’ operating profit more than doubled to $1.3 billion in the third quarter, but the losses at Chrysler dragged the company’s overall earnings down by 37 percent from the same period a year ago, to $686 million.


That is what the New York Times says. Personally, I shall be staggered if the top guys at Mercedes are prepared to accept the loss of face involved in selling off Chrysler. Any more than they have been prepared to bite the bullet over the Smart Car debacle. The ForFour was a flop and lost buckets of money and has been discontinued. The same is true of the Smart sports car. And the 4x4 Smart has been dropped before it even saw the light of day. Only the ForTwo remains and the model of that is on the way but it will be the only Smart for the time being. Ignoring the loyal fan club and the environment and looking only at the business economics they should have killed the lot off.

As for Chrysler, who knows. Ford and GM are both selling cars at a heavy loss. Ford lost over $5 billion dollars in the last quarter but GM have cut their losses substantially. But can any of them make a profit against Honda and Nissan and Toyota and Lexus?

 

[kid-jensen]

I always thought it was the most unlikely "merger" from the start.
What have they got in common, apart from making cars? The engineering expertise is almost entirely one-way and they operate in completely different markets, with markedly different types of cars.

A Mercedes-BMW merger would make more sense, or even a Mercedes-VW.

That little suggestion should get peoples fingers typing !

 

[PJW]

I always thought it was the most unlikely "merger" from the start.
What have they got in common, apart from making cars? The engineering expertise is almost entirely one-way and they operate in completely different markets, with markedly different types of cars.

A Mercedes-BMW merger would make more sense, or even a Mercedes-VW.

That little suggestion should get peoples fingers typing !

It was never exactly a match made in heaven - divorce is probably the best option. Of BMW or VW I would prefer the latter - always thought BMW was a bit too Chav. How about BMW-Chrysler and Mercedes-VW? That all sounds much better synergy!

Paul

 

[hawk20]

It was never exactly a match made in heaven - divorce is probably the best option. Of BMW or VW I would prefer the latter - always thought BMW was a bit too Chav.
Paul

Yes the Chav Chariot of Choice as some call the Beemer.

Why merge at all with anyone? Mercedes would make far more profit on its own without the Smart or Chrysler diversions. So many mergers are a disaster as Vodafone are finding out. Maybe the people in the companies don't like being taken over and do less well. Maybe the public in the US disliked Chrysler being bought up. Whatever the reason it's amazing how few mergers pay off. Yet still firms charge ever onwards doing more and more of them.

 

[psmart]

Daimler are selling their crown jewels....

....oh dear! Just when we thought things couldnt get worse!

 

[television]

....oh dear! Just when we thought things couldnt get worse!

there is lots of talk in the Ford set up going on right now.

malcolm

 

[hawk20]

there is lots of talk in the Ford set up going on right now.

malcolm

Yes, and hardly surprising. Once numbers exceed our annual income they are hard to grasp. To lose $5.8 billion in one quarter of a year means little till we remember that a billion is 1,000 million. So Ford's loss is equal to nearly $20 dollars per head for every man woman and child in America. And that was in one quarter.

So to survive they talk of selling Jaguar (for which they paid ludicrously high amounts) or Aston Martin or Range Rover or Volvo.

Fords ruined themselves by becoming known as a discount motor car. Huge discounts were given to fleets and hire car companies and shortsightedly they ignored the effect of all this cheap product entering the second-hand market. Then nobody dared by a new Granada or Scorpio as the residuals were so awful. Fords got left with them and discounted further to shift the metal. Granadas with 20 miles on them were selling for 60 to 70 per cent of retail price. In the end people like me switched to Mercedes just for the better residuals and Ford's production of big cars ceased.

Let us hope Mercedes don't make the same mistake. The CL500, a fine car, is at the moment, while waiting for the new model, being sold by dealers at silly prices. One £75k example was sold with 1000 miles on it for £27k below list. Mercedes see themselves selling off surplus production till the new model comes; I see them wrecking residuals for hundreds of owners.

 

[OmniCognateNeutronRangler]

so Hawk, as an economist, do you see the move to be away from big milti-national conglomorates back to smaller (although not small) companies? I had this vision that at some point there would be a company called "universal Inc" that basically owned everything based on the mega mergers of the last few years.

 

[OlafMaxwell]

I have an interesting obeservation on this.

We look at what things are like on the ground as it were rather than from the top. Quite a few loyal Chrysler customers I know in the US have complained bitterly about the service they have been getting. Looking at my own personal experience with what MB dare to call customer service it matches exactly my acquaintances comments about how their service at Chrysler has been given the Mercedes arrogant touch to the point where they will no longer consider Chrysler as a vehicle to purchase. Whether we like it or not the benchmark for quality service, particularly in the US, has to be Toyota/Lexus and the Japanese manufacturers. Look at the welcome a customer gets from Toyota/Lexus, no snooty salesmen, no snobbery, they listen to and value their customers. Whether we like it or not the big Lexus is a benchmark and I know many who have defected from the S class to Lexus. Most got ****ed off with Mercedes screwing them over things like the S class air suspension we all know about, the executive travel company who ended up with Japanese businessmen crawling out the windows of a 2 year old but barely out of warranty S class. They referred their driver to Lexus, such a thing would never happen with thier cars. Travel company promptly changes its fleet to Lexus sending a very powerful signal to their high end business customers. All manufacturers will have a problem with quality at times, for me and many others its not the fault that arises that creates the ill feeling, it's how it is dealt with. The approach to this determines the repeat sale and also provokes the customers into either selling your product for you or preventing your product being sold. When I ran into problems with MB I tried an experiment, I told them I was going to personally dissuade 100 customers from buying their models merely by acquainting buyers with their poor customer service and appalling record of dealing with defects. Despite the brand name it was one of the easiest things I have ever done. If Daimler Chrysler want their merger to work they are going to have to improve thier service. They are currently reaping what they have sown.

Try a comparison with Ryanair, they fly you from A to B, like it says on the tin. Cheap, so you get no compensation, frills free, they tell you that in advance so you get what you pay for.

With Mercedes don't pay cheap, you then get a warranty they try to wriggle out of, you get guarantees they refuse to honour, you get defects that dealers will hide until the warranty runs out. You get a prestige car but you do not under any circumstances get a quality car. These may be historic for many people but this site and many others are still getting this type of posts long after Mercedes said they were improving. Have a look at last months Mercedes Enthusiast. Why, for example buy an E class W211 estate at almost double the price of a Volvo estate which carries just as much? Yes, the name is worth something, they are not quite the same car, but for me, I would prefer have the lesser Volvo and professional customer service rather than the E320 estate and the appalling service we get from the local MB dealer here whose ultimate owner seems to be none other than........Daimler Chrysler.

Originally Mercedes may have gone for a limited market where their name counted for all but once they went for the mass market they have to match the best out there. One may feel that sites such as this attract only the complainers but the reality is if I were an investor my investment decisions would be made partly taking sites such as this into account. Instead of wasting money sponsoring golf and other sports and events Mercedes would get a far better return investing in quality customer service. Imagine if this produced a 5% uplift in sales, it would all feed through to the bottom line and make a huge impact on the profitability and the share price.

 

[OmniCognateNeutronRangler]

I hate to sound like Hawk20 Olaf (I really do...) but I used to own a Volvo and trust me they are every bit as bad as MB.

I had a brand new S40 and when you accellerated hard on full lock you get such bad wheel tramping that it knocks the car out of gear (as I found out to my horror when trying to pull out of a petrol station onto a dual carriage way). It even threw the cassette out of the tape player.

Volvo investigate this (after replacing the clutch master cylinder, the front wheel bearings and all the engine mounts on recalls) and eventually came to the conclusion that it was down to "my driving style". When I phoned head office to discuss this as I felt they mis-understood the nature of the problem they refused point blank to discuss it with me. They had reached their conclusion and that was it.

I sent the details through to the BBC Watchdog program and they phoned me up and wanted me to go on the show to discuss how a supposedly "safe" car had such a dangerous defect but as it was a company car I bottled out at the last minute.

I'm not trying to defend MB here, and I agree with your sentiments 100% Olaf. Unlike some others I don't see them through rose tinted glasses and have posted a lot of threads (as have others) on their failings. I'm just saying that unfortunately MB are no worse than many of the other car companies. Given the price you pay though, they SHOULD be better not just as bad.

 

[SLinKyjoe]

its another media wordplay.

either DaimlerChrysler are going to de-merge. which isnt going to happen in reality as it makes the smaller Daimler ripe for takeoover by bigger players, or they are going to rebrand and sell off the Chrylser name and the US manufacturing side of it. which is an indirect asset strip. They wont sell off the Jeep brand, and as Dodge appears to be making a profit there would be no reason to sell that either.

Bear in mind, A lot of Chrysler branded cars such as the 300C are in fact branded as Dodge in the US. and therefofe come under the dodge income stream.

I think it is just some people in the media looking for a story to keep Ford by suggesting that other companies are in the same problem as Ford.

Aston is up for sale coz it makes money. goot time to off load a brand that may well not be as good in 10 years. and the R&D of the AM V8 Vantage had its total costs hidden in Jag XK8 research. no wonder Jag isnt doing well.


Ford bought the Rover name to add it to the landrover company, which basically puts it back where it started. thus making that a possible attraction once the freelander2 becomes a success or a drain or its resources.

 

[hawk20]

When I ran into problems with MB I tried an experiment, I told them I was going to personally dissuade 100 customers from buying their models merely by acquainting buyers with their poor customer service and appalling record of dealing with defects.

Well you've certainly done what you said on this forum with almost all your postings putting the boot in. To be fair, every forum expects to have some who have had a duff car and got bitter. But not all expect to have someone who makes McCartney's wife look positively loyal.

With Mercedes don't pay cheap, you then get a warranty they try to wriggle out of, you get guarantees they refuse to honour, you get defects that dealers will hide until the warranty runs out. You get a prestige car but you do not under any circumstances get a quality car. .

That is libellous rubbish. Pity nobody will bother to sue you. My dealer, far from hiding defects, has on more than one occasion pointed them out to me and been nothing but helpful in putting matters right. I am sorry if you don't like to hear praise, any more than Omni does, but I speak as I find.

There are numerous threads showing where Mercedes have done more than the guarantee legally demanded. But, of course, we can all drag up cases where some decisions did not please the customer and even some that were harsh or even in our view wrong. But you could do that with any manufacturer and virtually any guarantee.

Let us try and give credit where it is due. Yes, Mercedes had a bad patch -and quite a long patch at that- on reliabilty. That is agreed and well documented. But they are now going to huge lengths to put matters right as I posted in a thread on the new E class. In addition, although nobody would say they are as reliable as we would all like yet, we can say that there is some evidence, especially from J.D.Power, that reliabilty is improving. And I find from various threads -and my own experience- that dealers are making real efforts to improve too. Mine certainly has and two or three years ago I thought they were awful. Now, I don't.

 

[television]

With MB making 400 S Class cars alone everyday of the week, and we get 2 complaints a year about them, it think speaks for itself. I also belong to the 2 big USA forums, they are too boring for me as all they talk about is their new buys, hardly anyone gets problems now.

malcolm

 

[johnmc]

There are numerous threads showing where Mercedes have done more than the guarantee legally demanded.

I have to agree completely with Hawk20 on this. My Merc has had more faults than my old 1981 Metro and I moan like hell about quality, but I've only put my hand in my own pocket for the recent electric window regulator faults. I've stunned that anyone would fix faults to the extent that they have on a six year old car, and plenty of older ones have been fixed too. There's evidence that they are getting better with newer products, about time.

Chrysler are in deep trouble, just at the same time that they are finally on the up in the UK and celebrating record sales (300C and Calibre). I personally believe that there's still too many car firms, too many product variants out there, and with the Chinese starting to sell in Europe and the US some will vanish. Merc with Chrysler is small enough to vanish if they don't watch their finances. I can see them merging with someone else.

John

 

[OlafMaxwell]

I dont mind giving praise where it is due.

I now deal with an official MB dealer who is independently owned. They call a spade a spade, no bull and no rubbish. They had an incident in their workshop, left the car down on a toolbox during a service. Told me they had bad news, explained what happened and that they had ordered the necessary parts but it would be a few days. They thought I was rather calm about it, to which I responded, there is no problem, it happened and you are fixing it and I am happy it will be done right. And of course it was. 100% satisfactory.

However, they had a less than satisfactory experience dealing with MB over some warranty issues. This dealer minds his business. One cannot ask for any more and will continue to use him and have recommended him to many people who were wary of MB. My advice tot hem was either buy there or ster clear of MB. My car is now at an age where I only have to deal with him and not with MB except perhaps rust issues.

Would I buy a new Mercedes? There are lots here who will and may who will not. In my opinion a well maintained used one is going to be far more reliable than what comes out of the factory. That may be changing but it is happening very slowly. All cars will yield problems and I am not naive enough to think otherwise. I owned 5 Fiats which threw up all the usual Fiat problems and to be fair I would have another. Why? Plain old fashioned dealer courtesy and honesty. I never had a Fiat dealer try to tell me a defective exhaust at 4000 miles was wear and tear. Or try to tell me leaking fluid at 23k was wear and tear. Or fail to fix a warranty defect on 3 occasions and then insist on being paid for it because they made an appointment outside the warranty period. I could not care less about the cause of the exhaust problem [a split seam weld, not unheard of] but dont try calling it wear and tear at 4,000 miles. Any manufacturer who adopts those tactics does not deserve praise. Its up to MB to control the dealers, up to the customers to put them in the picture.

 

[OmniCognateNeutronRangler]

nicely said Olaf

 

[johnmc]

I
I had a brand new S40 and when you accellerated hard on full lock you get such bad wheel tramping that it knocks the car out of gear (as I found out to my horror when trying to pull out of a petrol station onto a dual carriage way). It even threw the cassette out of the tape player.

Interesting. I assume that this was one of the old S40s that were Mitsubishi Carmisas in disguise. Mitsubishi were nailed for hiding safety problems for years with these and most other cars that they made.

The new ones now are Ford Focus based, so much better quality.

I agree with the comments about dealers, they are too variable. My repairs were funded by DC but it took legwork to find a cooperative dealer. Once found it was easy enough.

John

 

[OmniCognateNeutronRangler]

it was a 1998 model so I think you are right. Didn't realise about the safty cover ups though. Maybe I should have done the watchdog thing afterall.

 

[television]

New movement in the car trade.
JCB have dropped their interrest to buy Jaguar, the reason given is that ford will ony sell in a packet to include Landrover. Aston Martin is for sale, but JCB did not want that.
Fiat now own 85% of the Mediobancas part of Ferrari.
Talks broke down between GM and Renualt/Nissan, and now they are trying Ford.

malcolm

 

[hawk20]

New movement in the car trade.
JCB have dropped their interrest to buy Jaguar, the reason given is that ford will ony sell in a packet to include Landrover. Aston Martin is for sale, but JCB did not want that.
Fiat now own 85% of the Mediobancas part of Ferrari.
Talks broke down between GM and Renualt/Nissan, and now they are trying Ford.

malcolm

Wonder why they want to put Jaguar and Land Rover together. Look easy enough to separate at first glance. Are they both losing money? Not seen reports recently.