Mercedes still may profit from Chrysler

Mercedes still may profit from Chrysler

While the general understanding is that Mercedes is finished with
Chrysler, in fact Mercedes may still benefit from their so far
ill fated takeover. Unrecognized by most is that Mercedes made
Chrysler dependent on them for suspensions and transmissions for
its large cars, and one complete vehicle Chrysler will continue
to assemble from Mercedes supplied kits: the Sprinter. Of course,
Mercedes must be cautious to provide these parts at competitive
prices, lest Chrysler continue to lose money, something that may
be more difficult with the fall of the dollar.

Also often unrecognized is that Mercedes still owns 19.1% of
Chrysler, so if Chrysler eventually becomes profitable and
valuable, Mercedes' remaining stake might be sold for real money.
This would be in contrast to the Cerberus deal, where Mercedes
claimed it received money for Chrysler, but in actuality paid
Cerberus to take 79.9% of Chrysler.

The year end Mercedes news conference proved less than
enlightening in most respects. While Mercedes spokesman Heinreich
Tungensheek expressed disappointment over Chrysler discontinuing
the reskinned SLK it sold as the Crossfire, he refused to comment
on a question of whether retention of 19.1% of Chrysler was an
astute business move. The implication of the question was that
the only reason Mercedes still had a stake is Chrysler is because
it couldn't afford to give Cerberus any more money to take the

remainder.

However, the mystery of the pronunciation of DaimlerChrysler was
finally resolved. To American eyes, it looked like it should have
been pronounced "Dame lur cry slur". Yet ads during Mercedes
ownership consistently said "Dime lur cry slur". "It was
pronounced 'Dime lur', said Mr. Tungensheek. "The 'Chrysler' was
silent".

 

They should have paid me to assume ownership of chrysler... I wouldn't
mind having my own car company.

 

But at least when they paid Cerbus to take it, they have the
possibility that the 19.1% they still own might one day be valuable.
If they paid you to take it,...well one can only imagine.

Ed

 

Heaven forbid US car company be product-centric instead of make crap and
then use slick marketing to sell it.

 

I understand that Chrysler will continue to buy parts from Mercedes.
But I fail to see how Mercedes will still turn a profit on their huge
investment in Chrysler. To turn a profit they have to eventually
recover all of their investment plus earn a reasonable rate of return.
I don't know how Mercedes could do more than control their losses.

 

I'm pretty sure the transmission plant in Kokomo Indiana went with
Chrysler to Cerberus.

Of course, if Cerberus balks at paying, Daimler also sells it as a
Freighliner.

 

Well, we all know that doesn't work. Just look at the shape Toyota and
Honda are in for trying such silly ideas. You should be ashamed of yourself
;-)

 

Patently false. The LX transmission (the one based on a Benz design, but
revised and simplified) is manufactured at the CHRYSLER transmission
plant in Kokomo. The suspension parts, likewise, are not truly
interchangeable with Benz parts and are made by Chrysler.

The break was cleaner than you make it out to be. The "Mercedes"
components were all revised and are built in Chrysler plants by Chrysler.

In the future, Chrysler may well buy small common-rail diesel engines
from Mercedes, but that is functionally no different than buying the big
24-valve CRD from Cummins. Like Cummins, Caterpillar, Perkins, Detroit
Diesel, Scania, and others, Daimler-Benz sells diesel engines to many,
many OEMs.


and one complete vehicle Chrysler will continue

For now. I bet the Sprinter will get tossed from the Dodge lineup and
only Benz and Freightliner will badge it in the future.

 

If Chrysler was smart, they would develop their own Sprinter equivalent. It
has found tremendous acceptance in the parcel delivery field and also in the
RV industry for class B and C chassis. The order backlog for the Sprinter
is enormous and they sell all they can build.

Mike

 

What you guys are forgetting is that even if a Mercedes part is made
in a Chrysler plant, Mercedes will still be getting some sort of
royaly or license fee from Chrysler.

And I've posted the window-sheet (monroney) on a 300C showing that the
transmission came from Germany (not all 300's have their transmission
coming from Germany, but some do, perhaps it depends on the model, or
if AWD).

http://www.unioncjd.com/detail-2008-chrysler-300-c-2401517.html

And also based on the window sheet for a 300, you will note that the
car is listed at only 74% domestic parts content. That is actually 1%
short of what the US gov't considers as the threshold for a vehicle to
be called "domestically manufactured".

I'm reposting the following. Pay attention:

"The LX cars employ various parts from Mercedes E-class, such
as the 5-speed automatic gearbox, the rear differential, ESP
system, the double-wishbones front and 5-link rear suspensions."

http://www.autozine.org/html/Chrysler/300.html

"The LX platform is Chrysler's new full-size rear wheel drive
automobile platform for the mid part of the 2000s. The LX was
developed in America using components borrowed from the
Mercedes-Benz W220 S-class control arm front suspension,
Mercedes-Benz W210 E-Class the 5-link rear suspension, the
W5a580K 5-speed automatic, the rear differential, and the ESP
system."

http://www.answers.com/topic/chrysler-lx-platform


-----------
In 2005, the 3.5 was coupled to Chrysler's own four-speed automatic on
rear-drive models, and to the Mercedes five-speed automatic on
all-wheel-drive models.

Though Chrysler had already chosen rear wheel drive before the merger,
hooking up with Mercedes allowed (some say forced) the use of existing
technologies, including a low-end version of the Mercedes E-class
automatic transmission (the A580 electronic automatic), and versions
of Mercedes' stability control, steering, front suspensions,
electronics, rear suspensions, and seats. It is hard to tell how much
- if any - this has saved (or cost) in development, since
DaimlerChrysler worked hard to justify the takeover of Chrysler
Corporation in the face of stockholder lawsuits, and Chrysler
reportedly was paying steep royalties for their use of these
components (some of which were provided by outside suppliers in any
case)

The LX cars will use the Mercedes E class traction control, electronic
stability systems, axles, wire harnesses, automatic transmissions
(downgraded to five speeds from six so Chrysler won't go into Mercedes
turf - even as GM and Ford create a new six-speed automatic), steering
columns, and other major suspension components. 20% of the Magnum's
components are shared with Mercedes, according to Wolfgang Bernhard
(40% of the Crossfire is Mercedes so these figures are to be taken
lightly).

http://www.allpar.com/cars/lx/

 

Even though the content is only 74% American, that doesn't necessarily
mean that the balance is German. I know that a lot of American car
parts are made in Canada. I'm not saying that 26% of the 300 is all
Canadian, but I doubt that 26% is all German either. Just speculation.
I don't know for sure.

 

You're slightly confused. The 74% domestic number means US - Canada -
Mexico. The 26% foreign content is stuff that is made from outside
North America, so there is PLENTY of stuff that can come from Germany.

 

Given the success of the Sprinter, I've wondered why Ford doesn't
import a version of it's similar European Van for sale in the US.

Ed

 

Domestic content does not include Mexican parts, only the US and
Canada.......I know it doesn't make any sense, but that is the rule.

Ed

 

Mike Simmons wrote:

Yeah, but that market segment really isn't huge compared to others, and
profit margins on RV chassis is not huge either. I have read that even
Ford is killing their E-series which has been a really important player
in that market for many years. A "big" player in a little market segment
isn't necessarily going to help a company that needs to cut fat and get
competitive in its core markets again.


It will be very interesting to see if Chrysler survives this whole mess.
I hope so, but I fear the worst. They have a few promising products
either on the market or in the pipe. The new minivan really raises the
bar on features leaving Honduh in the dust.... AGAIN, and the
Challenger is of course a work of art. But is it enough? Probably not
without a small car better (or at least more conventional) than the
Caliber and a midsize FAR better than the Avenger/Sebring. We're kinda
in another Chrysler slump like happend 1958 and again in 1978. The core
engineering (engines/transmissions/major systems) is as good or better
than any in the world, but there are gaps in the lineup and problems
with some models have tainted the perception of everything.

 

You assume that. I personally don't know what the terms of the split
were at all. Its not necessarily like a book where the writer gets a
royalty every time one is sold, a one-time transfer of ownership of the
design would have covered all future production of the components.

I read that only the very early production cars used Germany-fabbed
transmissions. Kokomo has been fully tooled up for several years now.

As for the other references, you have to be careful how you parse the
ad-speak. When the LX first came out there was a perception that touting
its "Mercedes content" would boost its image. Maybe it did with a
certain segment of the population- not with me though. But at any rate,
a lot of the early ads were written touting the "Mercedes sourced"
parts, but when the reputable Mopar writers and researchers started
digging it turned out that virtually everything was at least slightly
re-designed, and in the case of the transmission pretty heavily
re-designed. Yes, the basic structures and geometries were from the
E-class, but they weren't bolt-on parts from an E-class at all (maybe
the differential- I don't actually know about that one- its certainly no
9-1/4 Mopar).

 

Yeah, but look at a pre-Diamler LH car. They were only running 80% or so
domestic, because they had things like Nippondenso alternators and AC
compressors (or Bosch alternators and Malaysia-built Sanden compressors
in some models), Mitsubishi or Nippondenso starter motors, etc. etc.
etc. You even have to count wheelbearings, power window motors, power
seat motors, electronics boards, door-lock solenoids etc. etc. which can
all be made in Taiwan or Malaysia, too, so there's lots of room for
non-German but non-Domestic parts too.

 

And I posted showing that ALL LX transmissions are made in Kokomo.

Hey, did you ever find which Mercedes use that 6-speed auto yet?

 

Actually it hasn't fared well in tests -- both Car & Driver and
Consumer Reports continue to rank the Sienna and Odyssey higher,
especially in handling and ride (why didn't Chrysler go to independent
rear suspension?). Also, as is the case with many current Chryslers,
both magazines criticized the cheap, flimsy-looking interiors.

See, I disagree. I think the new Camaro wins the styling contest.
Chrysler basically copied the 70s car; GM modernized it.

Yeah, they're still depending on trucks for their revenue. The good
news is, the current management seems to realize the products have to
be improved.

Look where recent C&D tests have put Chryslers:

Liberty -- bottom
minivans -- mid-pack
Sebring -- bottom
Caliber -- bottom
Patriot -- bottom

CR about the same, except minivans also near bottom.