DaimlerChrysler: Poster child of failed mergers

Sergio Marchionne says automakers consume too much capital. His solution: mergers and alliances.

But few deals destroyed more capital than the historic 1998 union that created DaimlerChrysler AG.

Chrysler was valued at $36 billion. Nine years later, it was zero when Daimler essentially paid Cerberus Capital Management to take Chrysler off its hands.

How did it go so wrong? Here are some lowlights.

Noncooperation. The deal was supposed to deliver $3 billion in annual synergies. But the German-American carmaker was defined not by how much Daimler and Chrysler would cooperate, but how little. A "brand bible" codified hard limits: no sharing of engines, no joint platforms.

Mopar trucks that delivered parts to Mercedes' U.S. dealerships had to be painted plain white lest customers get the idea their Benz would be tainted by Chrysler components.

Strong leader? CEO Juergen Schrempp had little support for his vision of a combined company. Mercedes executives said in public that they'd never drive a Chrysler. In board meetings, Chrysler executives were told to keep their opinions to themselves. 

It didn't help when Schrempp admitted his "merger of equals" term was basically a ruse to cover up what was in fact a Daimler takeover. Nor did Schrempp invest himself in making Chrysler work; he rarely made appearances at Chrysler. 

Culture clash. The two sides were separated by more than language. Americans attended seminars on German dining etiquette; Germans, sessions on what qualifies as sexual harassment in the U.S. Resentments mounted as German executives learned they were paid far less than lower-ranking Americans. A row once broke out over napkins, when German staffers objected to putting the company's name on something people use to wipe their mouths.