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. MERCEDES DIAMLER BENZ DAIMLERCHRYSLER

History Of Daimler AG :

History Of Daimler AG Daimler AG is a German manufacturer of automobiles, motor

vehicles, and engines, which dates back more than a century. An Agreement of Mutual
Interest was signed on May 1, 1924 between Benz & Cie (founded 1883) of Karl Benz and
Daimler Motoren Gesellschaft (founded 1890) of Gottlieb Daimler and Wilhelm Maybach.
Both companies continued to manufacture their separate automobile and internal combustion
engine brands until, on June 28, 1926, when Benz & Cie. and Daimler Motoren Gesellschaft
AG formally merged—becoming Daimler-Benz AG—and agreed that thereafter, all of the
factories would use the brand name of Mercedes-Benz on their automobiles. In 1998
Daimler-Benz AG "merged" with the American automobile manufacturer Chrysler
Corporation, and formed DaimlerChrysler AG. In 2007, when the Chrysler group was sold
off to Cerberus Capital Management, the name of the parent company was changed to simply
Daimler AG. 1926 1998 1924 1883 2007 Timeline of Daimler AG Benz & Company, 1883–
1926 Daimler Motoren Gesellschaft AG, 1890–1926 Daimler-Benz AG, 1926–1998
DaimlerChrysler AG, 1998–2007 Daimler AG, 2007–present

History of Chrysler :

History of Chrysler The company was founded by Walter Chrysler (1875 - 1940) on June 6,
1925, when the Maxwell Motor Company (est. 1904) was re-organized into the Chrysler
Corporation. Introduction of the first Chrysler vehicle. Opening of the Chrysler Building in
New York, the tallest building at that time. Chrysler vehicles increase in popularity and
market share ranks second in the US. Chrysler purchases the majority stake of Simca, France
in order to penetrate the European market. Simca is sold to Peugeot. Chrysler and its
subsidiaries were part of the German based DaimlerChrysler AG (now Daimler AG) 1925
1926 1930 1950 1963 1978 1998

What were the motives for Daimler-Benz and Chrysler in merging?

- Overcapacity: “Daimler-Chrysler started as a merger of equals in an industry the two

companies' analysis revealed to have staggering overcapacity” . Daimler-Benz AG’s
traditional markets were mature and merger with Chrysler was a solution for its restricted
expansion. The two companies were considered to fit together perfectly and the merger gave
the opportunity to utilizing each company’s strengths in production, markets, etc and
therefore exploits new markets while optimizing production.
- Increased market power: “Chrysler makes moderately priced cars and light trucks. Daimler
makes Mercedes luxury cars and heavy trucks. Chrysler is strong in North America and weak
in Western Europe; Daimler just the reverse. Chrysler is very capable in terms of design and
product development; Daimler holds the upper hands in engineering and technology” . The
integration between the two companies was supposed to “change the face of the automotive
industry” and create “a pre-eminent position in the global marketplace” 2

- Cost synergy: The top managers of the two companies were seeking for substantial cost
synergies in the merger (in purchasing, research and technology, distribution infrastructure
and financial services). Thanks to the strengths of each company in different divisions
(design and product development vs. engineering and technology), they can complement
each other and save cost.

- Reshaping the firm’s competitive scope: The integration between the two helped Daimler-
Benz reduce its dependence on North America market and expand to Western Europe as well
as helped Chrysler approach to foreign markets.

- Learning and developing new capabilities: the two companies could learn from each others’
manufacturing operations (product design and development; engineering and technology).