‘I say potato, you say kartoffel — Let’s call the whole thing off?’

by James Bryant, November 7th, 2006, 7:00 am

It’s only been about eight years since Daimler-Benz and Chrysler’s corporate nuptials and already there’s talk of a divorce. Late in October German magazine Der Spiegel quoted an anonymous DaimlerChrysler board member as saying “We would be irresponsible if we did not draw up exit scenarios,” in reference to a possible spin-off of Chrysler Group. DaimlerChrysler has since denied that any such move will happen.

After a year so devastating for the US automotive industry that it had GM talking to Renault about a strategic alliance, and Ford talking of going private, there is not much room left for surprises.

The truth is that throughout their tumultuous relationship, Chrysler Group and Mercedes Car Group seldom, if ever, have been simultaneously healthy. Much of the blame for this has been laid at the doorstep of former DaimlerChrysler boss Jürgen E. Schrempp, who along with former Chrysler CEO Robert Eaton cooked up the idea of the ultimate automotive super-merger-of-equals in the first place.

For those of you just tuning in, the merger was supposed to combine Chrysler’s mass manufacturing expertise and Good Ol’ American Know-How with the engineering savvy and general elegance of its German counterpart. Well, turns out, like it usually does, the merger of equals was essentially a sugar coating, if not an outright fabrication. Daimler-Benz was firmly in control and the ensuing clash of cultures had US executives and managers jumping ship almost immediately.

Enter Dieter Zetsche – or Dr. Z as he’s known to his friends. Dr. Z came to Chrysler and suddenly things began to improve. He patched up relations with Chrysler management and dealers, and he helped get exciting new products off the assembly line (the Chrysler 300C and Dodge Charger). But while Chrysler began to show signs of recovery, Mercedes Car Group began to suffer from poor quality and falling sales.

Then in 2005 Dr. Z left Chrysler to run the whole company and Jürgen Schrempp was out. Suddenly Mercedes was back on track, but Chrysler was on the skids – again.

So will Daimler and Chrysler plead irreconcilable differences and go their separate ways, or will a Korean scientist finally be able to clone Dr. Z so he can run both divisions? Only time and Der Spiegel can tell.