Tom Gale, a DaimlerChrysler board member, acknowledged last week that the company will find more synergies.
But the company won't use platform sharing, the Holy Grail the rest of the industry is pursuing to cut costs.
'If all the company's divisions start looking the same, we've got a problem,' Gale said.
The company will pursue synergies, or benefits, from the combining of Chrysler Corp. and Daimler-Benz AG in more modest ways than platform sharing. For example, it will combine its treasury staffs and base the department in Auburn Hills, Mich., beginning April 1.
Platform sharing is a growing practice in the industry. For example, Volkswagen AG is sharing platforms across its range of brands to cut development costs. Volkswagen's New Beetle and Golf share a platform with the Audi TT Coupe and A3.
'There are plenty of opportunities for sharing,' Gale said. 'But it doesn't mean things have to be off the same platform.'
Meanwhile, Wall Street, underwhelmed by the company's performance to date, is expecting much more from DaimlerChrysler.
'It is not over in terms of achieving synergies,' said Scott Merlis, auto analyst for Wasserstein Perella Co. in New York. 'I think the initial phase of integration is probably complete in terms of key components of the organization being in place and key people being in place. But integration sometimes continues for decades. There will always be better synergies to be reaped.'
Merlis expects DaimlerChrysler to identify enough shared operations next year to save the company an estimated $2 billion, or 1.3 percent of its 1998 revenue.
'There's probably more to be done in certain engineering areas and certain research and development areas,' Merlis said.
Juergen Hubbert, a DaimlerChrysler board member in charge of Mercedes-Benz and Smart cars, agreed that the new company must continue to identify shared activities that can save money.
Now that DaimlerChrysler has trimmed its management board from 17 to 14 and disbanded its post-merger integration team, it is up to the company's individual business units to identify cost-saving activities, Hubbert said, during a media event Oct. 1 in Nice, France, for the 2000 Mercedes-Benz CL coupe.
'Now the real work starts,' Hubbert said. 'What's different is integration will now be performed by our business units. We are done with integrating the management board. We are, of course, still just as interested in all the other things integration will bring: buying parts in common, sharing logistical functions, saving costs.'
DaimlerChrysler announced Sept. 24 that it has trimmed its management board and created three automotive divisions - Mercedes-Benz/Smart, headed by Hubbert; Chrysler/Plymouth/Jeep/Dodge, headed by James Holden, and Commercial Vehicles, headed by Dieter Zetsche.
TOP INTEGRATOR TO LEAVE
While the company will continue in its search for money-saving combinations, it has chosen to do so without the guidance of Tom Stallkamp, who has led the company's integration efforts during the last 16 months.
Stallkamp will retire Dec. 31. He was one of the casualties in the management reorganization.
In product development, it will be up to Daimler/Chrysler's Automotive Council to find activities that can be shared, Gale said, during a media tour of the new Walter P. Chrysler Museum in Auburn Hills Sept. 30.
Gale is coordinator of the Automotive Council, a small group of DaimlerChrysler board members charged with crafting the companies future strategies and plans for vehicles and components.
DaimlerChrysler said it will save $1.4 billion this year through shared operations, with about one-third coming from combined purchasing.
'I think there is quite a bit more integration to be done,' said John Casesa, auto analyst at Merrill Lynch in New York. Now that DaimlerChrysler has simplified its management structure, it will move on to the next level of integration, he said. 'They have started joint purchasing and a bunch of things that were relatively easy to combine both physically and in terms of time,' Casesa said.
But putting a Mercedes-Benz engine in a Chrysler vehicle or jointly designing a new plant to build cars in Europe will take more time to accomplish, he said.
'I think it will be an ongoing process that will take quite a few years,' Casesa said. 'Although during the next couple of years they will be getting through the meat of it.'
Casesa said that he is confident that DaimlerChrysler has achieved most, if not all, of the $1.4 billion in savings that the company had promised for 1999. The identified combinations were primarily in purchasing, which is something Chrysler knows well, and in other activities in which integration carries a relatively low risk, he said.
'I would be less confident, for example, if these were synergies in product development, which are very hard to achieve, or in plant productivity,' Casesa said.
During 2000, Casesa expects DaimlerChrysler to look more closely at product development for operations that can be shared.
Steven Rossi, DaimlerChrysler vice president for global product communications, said DaimlerChrysler has not announced a savings target from shared operations for 2000.
Automotive News reporter Jim Henry contributed to this report.