Tuesday, April 14, 2009

If Daimler cannot do it, nobody can do it.

For all Germans, cars are important. When Daimler acquired Chrysler, deeply inside me I thought "well, that doesn't sound good to me. How such a brilliant company, who already has a strong presence in the US, can take the risk to acquire a complete ruin?"

Nevertheless, under a German management in Detroit, Daimler sent over the Atlantic, the best car engineers of the world to fix Chrysler. The response from our fellow American friends from Chrysler has been: "We know our business, we know our customers, we have an excellent American management, we have world-class processes, we master the technology. We are just facing a temporary financial issue. Structurally, we are solid."

32 billions (German) Euros later, Daimler admitted that Chrysler cannot be fixed and they drop Chrysler. Let's face it, Chrysler cannot be fixed because Chrysler does not want to be fixed. The issue is elsewhere: in the pension funds, in the trade unions and in an American logic full of complacency and condescension that European companies cannot understand the American customers through a merger or an acquisition of an American company. Upfront, Chrysler never wanted the acquisition by Daimler to be successful. Chrysler wanted the Euros desperately and not the inherent responsibilities and duties. And let's admit it, on a strictly business point of view, from a Chrysler perspective, the deal has been extraordinary. Chrysler stole 32 billions (German) Euros, avoided the bankruptcy, enjoyed the same standard of living as before, continued to pay the pension funds and continued to exist as a brand and an icon of American car technology. Chrysler survived. Danke schon Daimler.

When the deal was over, Chrysler still needed the same amount of cash to burn. And they found the US government. Few billions (American) dollars later, Chrysler is the same disastrous company with the same desperate need of cash. Obama said "stop". Let's find another victim...

The Italians! not a bad idea. FIAT has just re-engineered entirely the company after having drop the disastrous partnership with GM. Fiat reinvented its cars, its spirit, its design, its segmentation and today, FIAT flies with an Italian furia with a clear positioning for each of its brands (Fiat, Alfa-Romeo, Ferrari, Maserati, Lancia). It looks like a good deal for FIAT. The reality will be different. Let's be honest with our lovely and magic italian friends: If Daimler cannot do it, nobody can do it. NOBODY.

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