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Above: DaimlerChrysler's logotype as it appears on its home page. Hurriedly done after the merger, it is difficult to believe that any consideration of its vision was made. Lack of communication, rather than fiduciary duty breach, could be more to blame for DCX's woes.

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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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