CHRYSLER

Allpar Weblog: Rumors are flying about DaimlerChrysler, AG finally letting Chrysler Group go. While some speculate that they’d keep Dodge trucks and Jeep, I don’t think that’s what will happen. The best thing for DaimlerChrysler would be to take Chrysler Group public as Chrysler Corporation or a less confusing name, such as American Motors (AMC), which was swallowed by Chrysler some time ago. (The advantage of not using Chrysler Corporation is ending the confusion over Chrysler brand vs Chrysler the corporate entity). The new corporation would be incorporated in Auburn Hills, Michigan, and DaimlerChrysler, AG, would retain 49.9% of the stock.

Here are some of the advantages of this arrangement for DaimlerChrysler.

First, the size of the company and its location in the US would force most American indexed mutual funds to buy the stock, instantly giving a huge boost to the stock price and raising the overall capitalization of DaimlerChrysler.

Second, the German stock buyers who, for some reason, hate Chrysler Group would start valuing DCX more highly, ending Chrysler Group’s claimed negative equity of $10 billion.

Third, once the US company was indexed and its stock had gone up, DCX could sell off more Chrysler stock while still remaining majority shareholder and retaining effective control. This could be an excellent way to raise capital and pretend to be earning money.

Fourth, Mercedes would still be able to siphon off billions of dollars from Chrysler in the form of mandatory consulting fees and royalties, while benefitting from Chrysler’s low-cost (compared to Mercedes) engineering excellence, economies of scale, and expertise in flexible manufacturing and larger vehicles.

Fifth, Chrysler Corporation or AMC or whatever it was called could claim to be an American company, which I think would help them quite a bit in the heartland, the South, and in the police markets (the cost of doing this is more than the police Charger is worth, on its own). The German-engineering campaign has failed dismally, with sales dropping every time the ads run. (This wouldn’t work if they kept Daimler in the name.) Unfortunately, for this to work, the brown-nosers extraordinaire in the executive suites would have to get some pride in their own country (where this is the US or Canada) and not be such incredible suckups that they think calling the new corporation DaimlerChrysler, Inc. is a great idea.

Sixth, there would be a huge morale boost among most of the owners and employees - at least, I think there would be. I know there are some people on the forums who really believe Mercedes has been great for Chrysler, even among those who realize the Hemi came from Auburn Hills, not Stuttgart. But as far as I can tell, the vast majority of people DO want Chrysler to be independent; they just don’t want it to be tossed out on the street with no assets, and they would like to be able to tap into Mercedes’ parts bins when needed. This is definitely possible and likely with a spinoff that is still majority Mercedes owned.

This would not entail changing anything about how the vehicles are engineered or built. We would not lose ESP, the five-speed rear-drive car automatic, VVT, or any of the other post-acquisition technologies. However, we would, I think, gain quite a bit of credibility, visible pride, and money. The Daimler would be gone from outside the factories at long last; the Chrysler media web site would not require a trip to DaimlerChrysler’s Mercedes-obsessed mediasite; and journalists would no longer continually point out that Dodge is German. The stage would also be set for more independence as time went on, or at least a more equal relationship.

Let’s hope that’s what the Daimler people are considering now - and that they go whole hog and do it right, instead of setting up another German-owned LLC or separating Chrysler and Dodge’s cars from Jeep and Dodge trucks, or creating a new subsidiary corporation in Germany, or a new corporation in America named DaimlerChrysler, or, worst of all, selling Chrysler to a Chinese company.