Now that Daimler-Benz AG and Chrysler Corp. have merged, expect their suppliers to begin doing the same thing.
The first post-merger supplier deal was announced last week, and analysts think others will follow soon.
Chrysler's chief exhaust-system supplier, Arvin Industries Inc. of Columbus, Ind., said it is taking a 49 percent equity stake in Daimler's key exhaust system maker, Zeuna Starker GmbH & Co., of Augsburg, Germany. Arvin's stake in Zeuna is expected to increase.
Arvin supplies between 75 percent and 80 percent of Chrysler's exhaust systems. Last year, Arvin won the contract to supply all of Chrysler's minivans.
Starker, a family-owned business with annual revenues of about $425 million, is less than one-fifth Arvin's size. But the German supplier is recognized as a top-line producer and technology leader, with more than 200 engineers. The company supplies Mercedes-Benz, BMW, Volvo, Rolls-Royce, Bentley, Volks-wagen, Fiat, Alfa Romeo and Ferrari.
'I certainly wouldn't be surprised if there were more mergers and partnerships driven by the Daimler-Chrysler merger,' said Bill Hunt, Arvin president. 'We had already had some discussions with Zeuna Starker when the Daimler-Chrysler merger arose, but that made for some pretty thick icing on the cake.'
'Additional Daimler-Chrysler supplier deals are inevitable,' predicted Greg Kagay, an auto industry analyst with McDonald & Co. Investments in Birmingham, Mich. 'Whether we see the two auto companies directly influencing the mergers or not, we'll at least see them strongly supporting them.'
Hunt notes that an Arvin-Starker link will help the suppliers find savings in purchasing, investments in new markets, and research and development. He also thinks DaimlerChrysler AG eventually will tackle joint engine programs. It will be important for the two supplier networks to be able to work together.
'Zeuna Starker has more of a history of participating in the design of new engines than is customary for an exhaust supplier in America,' Hunt said. 'I think we'll find some new synergies working with them.'