A Mundane Divorce

What DaimlerChrysler's former chief Jürgen Schrempp once called a "marriage from heaven" has now, after nine years, ended in a mundane divorce.

And it's probably the best thing that could have happened -- for both companies. Even though they will remain connected for years to come in joint technical projects and Daimler's minor stake in Chrysler, they still have better chances going it alone in the automotive business than being involved in a relationship designed along the lines of Jürgen Schrempp's vision of a Welt AG or World Inc. That dream quickly revealed itself to be a mere delusion of grandeur.

Schadenfreude inappropriate

The consequences of that are immense, and feeling a sense of schadenfreude would be inappropriate. After all, corporate strategies that have gotten out of control have once again caused millions of euros and many jobs to be lost. Daimler managers, with current chief executive Dieter Zetsche leading them at the time, cut 26,000 jobs at Chrysler. Now on its own, Chrysler will again have to lay off another 13,000 employees.

And, the way these things work when jobs are cut to increase profitability, what accompanied the announcement of the DaimlerChrysler split was a true firework display on the stock market -- not unlike the one that followed the news of Schrempp's disreputable departure.

Eyes bigger than mouth

Now it's official: Daimler bit off more than it could chew when it purchased Chrysler. First, there were not enough managers to restructure the already crippled company in the United States; then, it seemed that money was becoming scarce. That is when a split becomes mandatory.

The decisive majority-shareholder at Chrysler will be the private equity group Cerberus Capital Management. It will make a capital contribution of 5.5 billion euros ($7.4 billion) -- not as a purchase price, it should be noted, but in return for an 80.1-percent equity interest in Chrysler. In order to shed itself of Chrysler, Daimler must also throw in 1.2 billion euros.

Chrysler must now rely on its own strengths. In addition to having to rid itself of now hard-to-sell pick-up trucks and SUV's, it must also market fuel-efficient small cars since the American conscience has also changed.

Neither Chrysler, nor General Motors nor Ford, was prepared for that. Cerberus managers may now put a lot of pressure on Chrysler to make those changes quickly.

Daimler to profit most

Yet it is Daimler which is profiting the most from the divorce since the maker of luxury cars, trucks and buses will no longer have Chrysler as an albatross hanging from its neck.

The reputation of Daimler's management, however, has taken another beating. After all, the bad investment that cost many billions of euros is not restricted to the Chrysler issue alone, but is part of a larger complex that has dominated the ranks of Daimler's management for years.

The goal was a European-American-Asian automotive company in which the sun never sets. The result has been a financial disaster. It's a good thing that managers neither design nor build cars because Mercedes has only survived these managerial adventures because the Swabian engineers and workers of the company make such fantastic cars that can be sold high prices on the world market.

In other words: though they fervently tried for many years, the upper echelon of Daimler managers just wasn't able to drive the corporate group completely into the ground.

Karl Zawadzky is a DW economics expert (als)