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DaimlerChrysler’s
woes: no surprises
At the beginning of 2000, CAP
warned of DaimlerChrysler's lack of direction. As lawsuits mount,
we look at the problems and how they could be remedied by active
identity and brand management
AS KIRK KERKORIAN and others mount their lawsuits against DaimlerChrysler
AG, the media are focusing on the squabbles
inside the company. The replacement of Chrysler�s American head
with a German seems to fuel some xenophobes� fears, and to Kerkorian
and others, the event�and some quotes from DaimlerChrysler AG�s
chairman Jürgen Schrempp�confirm that the automaker had intended
to treat Chrysler Corp. as a North American division from the beginning.
New Chrysler Group president Dieter ZetscheIt is a cost-cutter,
something that has not bode well with those Americans who bought
into the company after seeing its enticing and exciting product
such as the Plymouth Prowler and Dodge Viper. Events also show,
say the plaintiffs, that the German company had failed its fiduciary
duty to disclose material facts and, in layman�s terms, saved money
when getting Chrysler Corp.
But DaimlerChrysler�s real woes aren�t with Kerkorian.
His company, Tracinda, may have been Chrysler�s largest pre-merger
shareholder, and he has sufficient funds to mount the legal challenge,
but DaimlerChrysler should be more concerned that in two years,
it has not been able to define properly where the Chrysler and Dodge
brands are positioned. From an identity perspective, it is not wholly
dissimilar to what BMW went through in respect
to its ill-fated acquisition of Rover.
We warned of danger at the beginning of 2000 in
an editorial, well before most media pushed the panic button. DaimlerChrysler
had not managed to fill the different, emerging automobile markets
brand-wise�thereby ignoring the first point of contact with the
audience and consumer. And visiting Chrysler dealerships around
the United States, one can see a mishmash of corporate symbols being
used. The pentastar, which hasn�t appeared in Chrysler advertising
for years, can be found at dealers. And the branding problems just
aren�t with brand manifestations. They are symptomatic of a confused
identity and vision within Chrysler Motors. It wouldn�t be surprising
to see the Plymouth name still on dealer�s signage in years to come,
despite DaimlerChrysler�s plan to retire that brand at the end of
the 2001 model year.
The real question is: what is DaimlerChrysler�s
vision and is the company living it? Very early on, it was apparent
that the Daimler-Benz�Chrysler Corp. union was not a merger of equals,
as the plaintiffs claim. Schrempp and Chrysler chairman Bob Eaton
would serve as co-chairmen, but Eaton would step down after the
merger was seen through. There would be equal power-sharing for
three years. The company was reincorporated in Stuttgart, Germany.
There were no guarantees that Americans would continue to head Chrysler
in Detroit.
Odd events followed. The lingua franca became
English, not German. Almost overnight, without considering what
�DaimlerChrysler� stood for, a new logotype was hastily designed
and implemented at Daimler-Benz and Chrysler Corp. plants around
the world. The two companies, in terms of R&D,
did little jointly and essentially operated as two organizations.
There was little to suggest that a proper identity evaluation had
been done. With the exception of some developments, such as Mercedes
M-class and Jeep Grand Cherokee SUVs coming
off the same production line, or Mercedes-Benz halting work on its
own minivans, the companies might as well have remained separate.
Is DaimlerChrysler a global automotive player
with Mercedes-Benz and Chrysler divisions, or is it an organization
that has two separate companies trying to compete for the same markets?
The web site sends both messages, just as DaimlerChrysler�s
public actions do. There are two operational headquarters, in Stuttgart
and Auburn Hills, Michigan. This suggests two companies vying for
global automotive markets. Perhaps it matters little today where
an organization is placed geographically for it to be a global player,
and two locations are acceptable. But it�s domicile that determines
where a legal person belongs, and that is Stuttgart. A glance at
the board of management members shows an overwhelming German presence,
suggesting a global corporation run by Germans and based in Germany.
Some articles have been published in other magazines
pointing to internal politics.
DaimlerChrysler, at least in its public materials,
continues to remain mum on exactly what the company stands for.
Its web site FAQ addresses shareholding,
not visions. Schrempp and Eaton are still listed as co-chairmen
(as at December 13, 2000). The only thing that comes close is an
old report written at the time of the merger where Schrempp espouses
the premium-brand leadership (ignoring Dodge and Plymouth) and Eaton
stating that individual brands �and their distinct identities� would
be maintained. �What is more important for success: our companies
share a common culture and mission.� That, as any identity professional
will state, is technically impossible: if there were a common culture
there would be no market-place differentiation between Chrysler
and Mercedes-Benz products.
�Globalization is a key objective in growing the
company,� says the report. Yet pre-merger, Daimler-Benz AG
was doing well with establishing operations in many new markets.
Chrysler Corp. had, and has, a successful venture in Beijing for
the construction of Jeep Cherokees.
DaimlerChrysler�s Australian site states �The
corporate structure is designed to fully reflect the unique attributes
of each of the DaimlerChrysler businesses.
�With this new structure and a clearly established
corporate synergy, we can move our business in Australia/Pacific
to a new performance level.�
Yet none of these sound like a vision statement.
We showed in the JY&A
Consulting study that vision statements aren�t important in
the presence of a tagline, but DaimlerChrysler lacks one of those,
too. Synergy is impossible when there is nothing to direct the individual
parts that make the whole stronger.
It�s tempting to contrast the brand management
of DaimlerChrysler with that of the Ford Motor Company. Ford began
its intent to become a global player by 2000 many years ago through
acquisitions. Therefore, there have been few problems in winning
prizes such as Volvo Cars and Land Rover, the latter acquisition
done swiftly after its former owner BMW made
its decision to sell. Ford has wasted no time in looking at producing
the Land Rover Defender in a more cost-effective way, taking lessons
from its F-series large trucks.
Ford�s identity system is getting confused now
that it has begun endorsing its premium brands with a Ford Motor
Co. logo and had hired Charlotte Church to sing its "global
anthem". However, it has acquired Volvo, Jaguar and others
without diluting their essences. Jaguar�s racing pedigree, for example,
has been preserved and enhanced through entry into Formula One.
And while the new X-Type shares platforms with the 2001 Mondeo,
Ford has been careful to use not just exterior panels to differentiate
the models. They are products from different organizations, worked
on by different teams, compromising only where necessary on the
automobiles� overall architectures. Promotion is done individually
by the divisions. Positioning, the most clear mark of brand management
within an automobile corporation, is clear. Despite the relative
similarity of size, Jaguar�s X-Type does not tread on the Ford Mondeo
because of its larger engines and its standard four-wheel-drive
system. Consequently, pricing is higher (not helped by the value
of sterling) and the new Jaguar is marketed as a premium product.
DaimlerChrysler supporters will argue that the
German company has done everything in the last paragraph, yet it
still stands out as an organization where the merger was serendipitous,
forced also by the prospect of rising share prices. That is always
a short-term recipe. There is really no platform sharing to help
cut costs, despite automobiles occupying the same size segments.
Whatever platform-sharing goes on now went on pre-merger, such as
Chrysler�s Sebring Coupé being based on Mitsubishi mechanicals.
There are also other questions. Is Chrysler a
premium brand? At the time of the merger, it would seem so, but
the cost-leading Plymouth brand�s offerings have been absorbed into
the Chrysler stable. That means, in some countries, the winged Chrysler
emblem graces the cheapest car (the Neon) as well as premium products
such as the luxury 300M sedan. And is Mercedes-Benz a premium brand?
The A-class, although developed well before the merger with the
idea first hatched by its developers in the 1970s, does not come
across as a luxury automobile although it is far more advanced than
anything from either party�s passenger car range. If Chrysler is
to straddle budget and premium niches, then will it have middle-class
offerings, and where does that leave Dodge? Can Dodge become a global
brand to showcase the sporty side of DaimlerChrysler (as Seat has
become under Volkswagen), and will the company pay to get the trademark
in Europe? Since these basic positioning questions have not been
answered, it�s difficult to conclude that there is a proper, global
vision in place. The only divisions that seem to have got on with
the job are Jeep, with the new Cherokee in the wings and other niche
products, and the part of Dodge creating Dodge Trucks.
How would we fix it?
The first step is to define the organization. Numerous identity
consultants would be willing to take on the job�a passion for automobiles
is, of course, vital. That would help reverse the pessimism setting
root within the Chrysler Group, with 2000�s downward sales� trends.
The vision will have to be unique and somehow accommodate DaimlerChrysler�s
continued dual-operational-headquarter status.
After definition of its vision, DaimlerChrysler
has to properly determine its brands in relation to its competitors.
Based on only a cursory glance, the sportiness of Dodge needs to
be emphasized to help the company fill that niche. Chrysler should
be moved to become the volume brand, producing rational, quality
automobiles, on a par with Volkswagen. This will infuriate some
who are used to the idea of Chrysler tackling Lincoln and Cadillac,
but it is the only realistic global move in our opinion with the
demise of Plymouth. Mercedes-Benz could be expanded brand-wise as
the corporate luxury brand�and that means fighting globally, including
on both sides of the Atlantic. That could also mean that there needs
to be Mercedes-Benz automobiles that have American design input,
which is even more difficult for purists to accept. However they
should bear in mind Chrysler�s platform teams and industry-leading
product-development times in the mid-1990s, from which Mercedes-Benz
could learn.
In other words: a Chrysler that is more German
and a Mercedes-Benz that is more American, or at least Mercedes
products like the new C-class that show a design flair that Americans
are willing to embrace (and not the dull E-class).
A global range, while recognizing DaimlerChrysler�s
34 per cent stake in Mitsubishi Motors Corp., could appear as the
following, with strong platform reduction and cars occupying the
brand segments as stated.
Table
1 Suggested future platform sharing for passenger cars and brand
division between Chrysler, Dodge, Mercedes-Benz and Mitsubishi.
Tags such as 'Standard', 'Quality' and 'Premium' are used to differentiate
brands only, rather than be an exhaustive description of the market
niche. Minivans, SUVs and sports cars (such as the Dodge Viper)
are not included in this breakdown.
Micro platform |
| Standard |
Mitsubishi Minica |
| Quality |
Future Chrysler microvan for
Europe, Asia and South America |
| Premium |
Smart, Smart Coupé |
Sub-B front-wheel-drive platform (supermini), rivalling Ford
Fiesta |
| Standard |
Rebadged Chrysler Java for Mitsubishi |
| Quality |
Chrysler Java |
| Premium |
Mercedes-Benz A-Klasse, lwb van |
C front-wheel-drive platform (subcompact), rivalling Ford
Focus |
| Standard |
Mitsubishi Mirage/Lancer |
| Quality |
Chrysler Neon, but renamed, with
full range including hatchbacks and wagon |
| Sport |
Dodge Neon sports model |
C front-wheel-drive platform (compact) based on stretched
BC, rivalling Fiat Brava |
| Standard |
Mitsubishi Carisma
Mitsubishi Space Star
Mitsubishi Eclipse Coupé
|
| Quality |
Chrysler Neon-based junior MPV |
| Sport |
Dodge junior MPV
Dodge sports car based on Mitsubishi Eclipse |
CD platform, rear-wheel-drive (medium), rivalling Ford Mondeo |
| Standard |
Mitsubishi GTO |
| Sport |
Dodge Stratus |
| Premium |
Mercedes-Benz C-Klasse |
D platform, front-wheel-drive (intermediate), rivalling Toyota
Camry |
| Standard |
Mitsubishi Galant |
| Quality |
Chrysler Sebring |
DE platform on stretched D, front-wheel-drive (executive),
rivalling Toyota Avalon |
| Standard |
Mitsubishi Diamante |
DE platform, rear-wheel-drive (executive), rivalling BMW
5er Reihe |
| Standard |
Mitsubishi Debonair |
| Quality |
Chrysler 300N |
| Sport |
Dodge Intrepid |
| Premium |
Mercedes-Benz E-Klasse |
E platform, rear-wheel-drive (large), rivalling BMW 7er Reihe |
| Premium |
Mercedes S-Klasse |
The above is not meant to be an engineering-based
table, but one designed to show that the suggested division of brands
is possible and that DaimlerChrysler could be true to a global philosophy
as a multiple-HQ organization with a portfolio
of brands. It does assume that this is the outcome of the evaluation
of DaimlerChrysler�s vision and in that respect, is academic only.
Another scenario, that of a German corporation
with divisions on both sides of the Pond, may require a different
approach. It would entail a reduction in the Chrysler and Dodge
ranges as R&D is centred in Stuttgart
with cooperation from Mitsubishi Motors for the compact lines, potentially
leaving it weak against onslaught from multiple divisions of the
Big Two automakers in the North American market. The brands would
become more vital and the distinction between them could remain
as stated above.
Compiled by the staff of JY&A
Consulting, jyanet.com/consulting/.
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