Bob Eaton often said he wanted to be the Chrysler Corp. chairman who never presided over a comeback.
Well, he got his wish.
And let's be clear: It was the fear of someday failing that forced Chrysler executives into their surprising merger with Daimler-Benz AG. Will similar fears move other world automakers to combine forces?
Probably. The trend in the auto industry is bigness. Bigger and fewer automakers will buy parts from bigger and fewer suppliers, and sell cars through bigger and fewer dealers. When a powerfully profitable automaker such as Chrysler merges, imagine what they're thinking at the struggling automakers.
For all of its strengths, Chrysler has had an obvious weakness. It is predominantly North American, which is great while the American economy booms. But Chrysler was headed south whenever the American economy headed south. That's why the stock has been stuck at mediocrity despite the great profits.
Thus Chrysler needed a bigger international presence. Meanwhile, Daimler-Benz Chairman Juergen Schrempp wanted to become a mass automaker for the world. Just five years ago, the company made fewer than 500,000 Mercedes-Benz cars. This year, Daimler-Benz will top 1 million.
But as Jac Nasser, president of Ford Automotive Operations, said last week, even a million may be too small to compete in the new competitive landscape with its huge costs of product development, environmental compliance, and global investment.
DaimlerChrysler offers some synergies. The combine can sell Chrysler trucks and Mercedes cars worldwide. Still, it's weak in mass-market cars for the developing world.
In engineering and manufacturing strengths, there's no obvious synergy. Sure, Daimler can show Chrysler how to make world-class quality, but who wants to pay $22,000 for a Neon?
The combined management will have to be careful not to kill the Chrysler can-do spirit, nor the Mercedes-Benz commitment to being the world's best.
Is it a good deal? Probably.
Bigness can be an advantage, but General Motors executives can point to a thousand ways it can also be a hindrance. Still, look for other automakers to join forces soon. It's the global economy.