Download Diamler Chrysler Merger Essay Research Paper Two

Diamler Chrysler Merger Essay, Research Paper
Two of the world’s most profitable car companies – having a strong presence in Europe, North
America and Asia, with the enormous potential for even more growth around the globe –
together will now rank third in the world in revenues and fifth in vehicle unit sales.
Assets being blended include time-honored brands and speed to market, high-technology
advances and product innovations in both the North American and European markets. Together,
they form a global powerhouse. One of the chairmen for the new merged corporations stated that
the Corporation will be, “Number one worldwide in the premium car segment, a world market
leader with sport-utility vehicles and minivans, and the world’s largest producer of commercial
vehicles.”
But DaimlerChrysler’s reach extends not just to cars and commercial vehicles, but also to
aerospace, services, finance, railway systems, automotive electronics and diesel engines. The
new company was formed with one clear goal-to become the pre-eminent automotive,
transportation and services company in the world. Globalization is a key objective in growing the
company. Chrysler Corporation and Daimler-Benz were strong in two leading markets: North
America and Western Europe, respectively. As DaimlerChrysler, the company looks to enter and
develop new markets in Asia (priority), South America and Eastern Europe.
With its product line, which encompasses automobiles, transportation products and services, and
its solid financial position, DaimlerChrysler is in line to take advantage of growth opportunities
in new markets and at the same time, strengthen its position in traditional markets. Those new
markets, such as Latin America and Asia, may require new products, specifically designed for
their needs. With these combined resources, DaimlerChrysler expects to outdistance the
competition by more quickly developing market-ready products and services.
DailmerChrysler, at a quick glance
Company Ownership: European, U.S. and other international investors own DaimlerChrysler.
Group Headquarters: Stuttgart, Deutschland, and Auburn Hills, Michigan, USA
Chairmen: Robert J. Eaton and J?rgen E. Schrempp
Market Capitalization: Currently about EUR 80 ($74) billion
Total Revenues: 1998: EUR 131.8 ($112) billion
Investments: 1999-2001: EUR 46 ($38) billion to be invested in the future of DaimlerChrysler
Automotive Sales: 4.5 million units in 1998 (Passenger Cars and Commercial Vehicles)
Employees: 441,500 at the end of 1998
Global Brands: Mercedes-Benz, Chrysler, Plymouth, Jeep?, Dodge, smart, Freightliner, Sterling,
Setra,
Airbus, Eurocopter, Ariane, debis, Adtranz, MTU, TEMIC.
Chronology of the inception of the DailmerChrysler.
The DaimlerChrysler merger took approximately one year. The process began when Jurgen
Schrempp, President of Mercedes-Benz and Robert Eaton, Chief Executive Officer (CEO) of the
Chrysler Corporation, met to discuss the possible merger on January 18, 1998. After receiving
approval from a number of groups, the merger was completed on November 12, 1998.
Important Dates
January 12: Mercedes-Benz and Chrysler met to discuss the possible merger.
May 6: Merger agreement was signed in London.
May 7: Merger agreement was announced worldwide.
May 14: Daimler-Benz Supervisory Board agreed to merger.
July 23: European Commission approved the merger.
July 31: Federal Trade Commission approved the merger.
August 6: DaimlerChrysler announced that their shares would trade as “global stock” instead of
American Depository Receipts.
September 18: 97% of Chrysler shareholders and 80% of Daimler-Benz shareholders approved
the merger.
November 12: DaimlerChrysler merger was completed.
Terms of the Merger.
Certain terms were established concerning the merger of Chrysler and Daimler. These terms
affect many different areas of the combined entity.
a. DaimlerChrysler will have headquarters in Germany and Michigan, but the company will be
incorporated in Germany with a traditional German structure.
b. The chief executives of DaimlerChrysler will be Jurgen Schrempp, Chairman of DaimlerBenz Management Board, and Robert Eaton, Chairman and Chief Executive officer of Chrysler
Corporation. Schrempp and Eaton will work together as co-chairmen for three years, after which
Eaton will retire.
c. Shareholders of both companies must exchange their stocks after the merger. Daimler-Benz
shareholders receive one share of DaimlerChrysler for each share they currently own, and
Chrysler shareholders receive 0.547 of the new company’s shares for every Chrysler share they
own.
d. Executives promise not to lay off any employees or close any plants as a result of the merger.
e. The company decided not to use the DaimlerChrysler name on any of its vehicles. The current
brands will remain the same:
Mercedes-Benz, Chrysler, Plymouth, Jeep, Dodge, Freightliner, Sterling, and Setra. Vehicles
produced in the future will also be made under separate brands.
f. The company expects to incur financial benefits from the merger. Cost savings are estimated to
be $1.4 billion after the first year, and $3.5 billion over the next several years. DaimlerChrysler
should also have $92 billion in market value and $130 billion in annual revenue.
These terms provide benefits for everyone involved in the merger. The chairmen will not lose
their status, employees will not lose their jobs, and shareholders will have investments in a larger
company with higher profit margins. All parties will win under the new alliance.
Global Sales Plan, the backbone of the new Corporation
DaimlerChrysler decided on a new Global Sales and Marketing Organization for passenger cars
and commercial
vehicles. This operational structure will support sales growth and protect the company’s ten
brands. The structure concentrates on three key market regions and targets specific brands to
each market region. Brand managers from the Marketing Integration Council will be assigned to
each region.
Mr. James Holden, the Executive Vice President for Chrysler Sales and Marketing, will be in
charge of worldwide brand management and strategic marketing of Chrysler, Plymouth, Dodge,
and Jeep in the North American region.
Mr. Dieter Zetsche, the Executive Vice President of Mercedes-Benz Sales and Marketing, will
be in charge of worldwide brand management and strategic marketing of Mercedes-Benz and
smart cars in Europe, Asia, Africa, and Australia.
Mr. Kurt Lauck, the Executive Vice President of Commercial Vehicles, will be in charge of
global brand management of Commercial Vehicle brands, Freightliner, and Sterling.
Mr. Ted Cunningham, the Executive Vice President of Chrysler International, will be in charge
of Regional Sales and Marketing for the Latin American markets.
Associating brands with market regions will differentiate the brands from each other and allow
DaimlerChrysler to distribute its products globally. Globalization is essential to growth in this
company. The merger gave DaimlerChrysler strong markets in North America and Western
Europe, but the goal is to develop markets in Asia, South America, and Eastern Europe, making
Asia and Latin America priorities.
Mergers have historically occurred when one company was financially vulnerable. In this case,
both companies are strong, reaching record profits. In fact, jobs have been added at both
Daimler-Benz and Chrysler this year. Redundancies between the companies are minimal. In the
automotive sector, the two companies’ major brands compete in different market segments and
in different geographic regions.
Instead of one partner being “rescued” by the merger, the DaimlerChrysler union is a merger of
equals, prompted not by necessity but by opportunity. Daimler-Benz, along with possessing the
pre-eminent luxury car brand, Mercedes-Benz, is known for its engineering skill and
technological advances. Chrysler’s innovation, speed in product development and bold
marketing style are world-renowned.
In the automotive sector, there are premium passenger cars under the Mercedes-Benz name as
well as cars and trucks under the brands Jeep?, Chrysler, Dodge, Plymouth and SMART. There
also are commercial trucks, buses and vans bearing the names Mercedes-Benz, Freightliner,
Setra, Sterling and Thomas Built.
In addition to the automotive sector, DailmerChrysler, AG (Griffith) combined many other
Mercedes-Benz and Chrysler Corporation assets. The include:
DaimlerChrysler Aerospace (Dasa) is subdivided into the following divisions: Commercial
Aircraft, Helicopters, Military Aircraft, Space Infrastructure, Satellites, Defense and Civil
Systems, and Aero engines. Dasa is closely involved in the reorientation of the European
aerospace industry.
Commercial Aircraft: the Airbus family continues to grow. The Airbus activities are
consolidated in the largest sector of Dasa, DaimlerChrysler Aerospace Airbus GmbH. Dasa
holds a 37.9% in the European Airbus Consortium, and currently the world’s number two in
passenger aircraft.
Helicopters: global leader with a broad range of products. Dasa owns a 40% percent of the
Franco-German Eurocopter Group, the world’s largest helicopter maker. Military helicopters,
civil helicopters and customer service are the three units within the Eurocopter Group.
Aerospacial GmbH’s wide gamut of products, covering some 90 percent of market needs.
Military Aircraft: Focus on Eurofighter. The Military Aircraft division within Dasa performs the
development, production and maintenance of various military aircraft.
Space Infrastructure: Success with Ariane Laboratories, space stations and major and minor
transport systems for space travel are the core activities of the Space. The Defense and Civil
Systems division provide defense electronics, guided missiles and armament systems. These
include military reconnaissance, marshalling, information and communication systems as well as
radar technology, electronic warfare equipment and air defense systems.
Satellites: The main activities of this division are the development, production and sale of
satellite systems, mini-satellites, instruments, sub-systems and components for a host of
applications, both commercial and scientific. There is international demand for the skills of
DaimlerChrysler Aerospace
Aerospace Engines: MTU Motoren- und Turbinenunion M?nchen GmbH is Germany’s leading
engine and turbine manufacturer, plays an active role in numerous engine programs for civil
transport, military and freight aircraft as well as helicopters.
Along with globalization, the shift towards a service-based society is the most outstanding
characteristic of the structural changes. DaimlerChrysler Services (debis) has been making full
use of the expanding service markets. Also incorporated in this scheme is Chrysler Financial,
one of world’s largest lenders for automobiles and debis transactions.
Cost/Profit of the new Global Corporation
DaimlerChrysler’s Third-Quarter Operating Profit up 24%, Revenues up 15%, Net Income up
14%
Adjusted earnings per share for third quarter up from EUR 1.36 ($ 1.45) to EUR 1.51 ($ 1.61).
Most of this comes from record sales of passenger cars, light trucks and commercial vehicles.
Positive outlook due to strong sales and order backlog also allow for a larger profitability of for
the future.
Sale of debitel and the Dasa merger continue
Adjusted operating profit year-on-year rose 24% to EUR 2.6 ($ 2.7) billion. Third quarter
revenues increased by 15% to EUR 36.2 ($ 38.6) billion, reflecting the company’s stable and
profitable growth across most of its automotive, services and aerospace business units.
For the nine months ended September 30, adjusted net income increased 12% to EUR 4.6 ($ 4.9)
billion on revenues of EUR 108.5 ($115.5) billion, also up 12%. Earnings per share were EUR
4.62 ($4.92). In the same period, operating profit, adjusted for one-time effects, improved 15%
to EUR 7.6 ($ 8.1) billion.
Unadjusted operating profit in the third quarter rose by 60% to EUR 3.3 ($ 3.5) billion, including
EUR 886 ($ 943) million from the Debitel sale to Swisscom.
Outlook for fourth quarter and full year 1999
DaimlerChrysler expects continued strong growth in revenues and profits in the fourth quarter.
For the year as a whole, revenues are expected to increase to at least EUR 146 ($ 155) billion or
by about 11% year-on-year, with profits growing faster than revenues, helped by merger
synergies amounting to EUR 1.3 ($ 1.4) billion.
Record sales and profits for passenger car and light truck
In the third quarter 1999, almost all divisions of DaimlerChrysler reported double-digit revenue
growth. The most significant profit increase came from the Passenger Cars Mercedes-Benz,
SMART division, where operating profit was up 40% to EUR 708 ($ 754) million on revenues of
EUR 9.2 ($ 9.8) billion – up 15% – demonstrating very healthy profits from the Mercedes-Benz
brand.
Sales of Mercedes-Benz passenger cars continued to set records with 242,700 units in the third
quarter, up 7% year-on-year. In the first nine months, 733,300 Mercedes-Benz cars were sold, up
12% over the same period in 1998. Sales of smart totaled 51,300 units in the first nine months.
The Chrysler Passenger Cars and Trucks division reached record revenues of EUR 15.2 ($ 16.1)
billion in the third quarter, up 19% year-on-year on unit sales of 722,400, up 7%. In the same
period, operating profit increased by 11% to EUR 1.0 ($ 1.1) billion.
In the Commercial Vehicles division, third quarter sales also set a new record and were up 11%
to 139,800. Operating profit increased slightly to EUR 303 ($ 322) million.
The Services division also increased its revenues with double-digit growth rates (up 17%).
Operating profit was EUR 1.2 ($ 1.2) billion in the third quarter.
Outlook for DailmerChrysler AG
“This is a historic merger that will change the face of the automotive industry,” said J?rgen E.
Schrempp. “By combining and utilizing each other’s strengths, we will have a pre-eminent
strategic position in the global marketplace for the benefit of our customers. We will be able to
exploit new markets, and we will improve return and value for our shareholders.”
Along with a growing share of the global transportation market, DaimlerChrysler expects to
realize cost savings from combining operations. In 1999, the first year of merged operations,
DaimlerChrysler expects to realize benefits of $1.4 billion (EUR 1.6 billion)
These synergies are expected to be realized, in the medium term, by sharing know-how in
engineering and manufacturing. DaimlerChrysler management expects annual benefits for the
following years to be significantly higher.
Not every area will be consolidated. The safeguarding and nurturing of each brand’s unique
image and position will have highest priority. Car design is an example of a function that will
certainly remain separate. While teams will work together and share best practices, it is
imperative that the company maintains the success and identity of each brand.
DaimlerChrysler’s new stock will be traded around the world as a single class of “registered
ordinary shares,” not as the “depository receipts” that German companies with bearer shares up
to this point have used when their shares have been listed on the New York Stock Exchange.
This action, like the merger itself, represents a historic first: Never before has a German
registered company done this. Among other advantages, it represents a big step in making the
new stock easy to trade — all around the world.
Bibliography
Two of the world’s most profitable car companies – having a strong presence in Europe, North
America and Asia, with the enormous potential for even more growth around the globe –
together will now rank third in the world in revenues and fifth in vehicle unit sales.
Assets being blended include time-honored brands and speed to market, high-technology
advances and product innovations in both the North American and European markets. Together,
they form a global powerhouse. One of the chairmen for the new merged corporations stated that
the Corporation will be, “Number one worldwide in the premium car segment, a world market
leader with sport-utility vehicles and minivans, and the world’s largest producer of commercial
vehicles.”
But DaimlerChrysler’s reach extends not just to cars and commercial vehicles, but also to
aerospace, services, finance, railway systems, automotive electronics and diesel engines. The
new company was formed with one clear goal-to become the pre-eminent automotive,
transportation and services company in the world. Globalization is a key objective in growing the
company. Chrysler Corporation and Daimler-Benz were strong in two leading markets: North
America and Western Europe, respectively. As DaimlerChrysler, the company looks to enter and
develop new markets in Asia (priority), South America and Eastern Europe.
With its product line, which encompasses automobiles, transportation products and services, and
its solid financial position, DaimlerChrysler is in line to take advantage of growth opportunities
in new markets and at the same time, strengthen its position in traditional markets. Those new
markets, such as Latin America and Asia, may require new products, specifically designed for
their needs. With these combined resources, DaimlerChrysler expects to outdistance the
competition by more quickly developing market-ready products and services.
DailmerChrysler, at a quick glance
Company Ownership: European, U.S. and other international investors own DaimlerChrysler.
Group Headquarters: Stuttgart, Deutschland, and Auburn Hills, Michigan, USA
Chairmen: Robert J. Eaton and J?rgen E. Schrempp
Market Capitalization: Currently about EUR 80 ($74) billion
Total Revenues: 1998: EUR 131.8 ($112) billion
Investments: 1999-2001: EUR 46 ($38) billion to be invested in the future of DaimlerChrysler
Automotive Sales: 4.5 million units in 1998 (Passenger Cars and Commercial Vehicles)
Employees: 441,500 at the end of 1998
Global Brands: Mercedes-Benz, Chrysler, Plymouth, Jeep?, Dodge, smart, Freightliner, Sterling,
Setra,
Airbus, Eurocopter, Ariane, debis, Adtranz, MTU, TEMIC.
Chronology of the inception of the DailmerChrysler.
The DaimlerChrysler merger took approximately one year. The process began when Jurgen
Schrempp, President of Mercedes-Benz and Robert Eaton, Chief Executive Officer (CEO) of the
Chrysler Corporation, met to discuss the possible merger on January 18, 1998. After receiving
approval from a number of groups, the merger was completed on November 12, 1998.
Important Dates
January 12: Mercedes-Benz and Chrysler met to discuss the possible merger.
May 6: Merger agreement was signed in London.
May 7: Merger agreement was announced worldwide.
May 14: Daimler-Benz Supervisory Board agreed to merger.
July 23: European Commission approved the merger.
July 31: Federal Trade Commission approved the merger.
August 6: DaimlerChrysler announced that their shares would trade as “global stock” instead of
American Depository Receipts.
September 18: 97% of Chrysler shareholders and 80% of Daimler-Benz shareholders approved
the merger.
November 12: DaimlerChrysler merger was completed.
Terms of the Merger.
Certain terms were established concerning the merger of Chrysler and Daimler. These terms
affect many different areas of the combined entity.
a. DaimlerChrysler will have headquarters in Germany and Michigan, but the company will be
incorporated in Germany with a traditional German structure.
b. The chief executives of DaimlerChrysler will be Jurgen Schrempp, Chairman of DaimlerBenz Management Board, and Robert Eaton, Chairman and Chief Executive officer of Chrysler
Corporation. Schrempp and Eaton will work together as co-chairmen for three years, after which
Eaton will retire.
c. Shareholders of both companies must exchange their stocks after the merger. Daimler-Benz
shareholders receive one share of DaimlerChrysler for each share they currently own, and
Chrysler shareholders receive 0.547 of the new company’s shares for every Chrysler share they
own.
d. Executives promise not to lay off any employees or close any plants as a result of the merger.
e. The company decided not to use the DaimlerChrysler name on any of its vehicles. The current
brands will remain the same:
Mercedes-Benz, Chrysler, Plymouth, Jeep, Dodge, Freightliner, Sterling, and Setra. Vehicles
produced in the future will also be made under separate brands.
f. The company expects to incur financial benefits from the merger. Cost savings are estimated to
be $1.4 billion after the first year, and $3.5 billion over the next several years. DaimlerChrysler
should also have $92 billion in market value and $130 billion in annual revenue.
These terms provide benefits for everyone involved in the merger. The chairmen will not lose
their status, employees will not lose their jobs, and shareholders will have investments in a larger
company with higher profit margins. All parties will win under the new alliance.
Global Sales Plan, the backbone of the new Corporation
DaimlerChrysler decided on a new Global Sales and Marketing Organization for passenger cars
and commercial
vehicles. This operational structure will support sales growth and protect the company’s ten
brands. The structure concentrates on three key market regions and targets specific brands to
each market region. Brand managers from the Marketing Integration Council will be assigned to
each region.
Mr. James Holden, the Executive Vice President for Chrysler Sales and Marketing, will be in
charge of worldwide brand management and strategic marketing of Chrysler, Plymouth, Dodge,
and Jeep in the North American region.
Mr. Dieter Zetsche, the Executive Vice President of Mercedes-Benz Sales and Marketing, will
be in charge of worldwide brand management and strategic marketing of Mercedes-Benz and
smart cars in Europe, Asia, Africa, and Australia.
Mr. Kurt Lauck, the Executive Vice President of Commercial Vehicles, will be in charge of
global brand management of Commercial Vehicle brands, Freightliner, and Sterling.
Mr. Ted Cunningham, the Executive Vice President of Chrysler International, will be in charge
of Regional Sales and Marketing for the Latin American markets.
Associating brands with market regions will differentiate the brands from each other and allow
DaimlerChrysler to distribute its products globally. Globalization is essential to growth in this
company. The merger gave DaimlerChrysler strong markets in North America and Western
Europe, but the goal is to develop markets in Asia, South America, and Eastern Europe, making
Asia and Latin America priorities.
Mergers have historically occurred when one company was financially vulnerable. In this case,
both companies are strong, reaching record profits. In fact, jobs have been added at both
Daimler-Benz and Chrysler this year. Redundancies between the companies are minimal. In the
automotive sector, the two companies’ major brands compete in different market segments and
in different geographic regions.
Instead of one partner being “rescued” by the merger, the DaimlerChrysler union is a merger of
equals, prompted not by necessity but by opportunity. Daimler-Benz, along with possessing the
pre-eminent luxury car brand, Mercedes-Benz, is known for its engineering skill and
technological advances. Chrysler’s innovation, speed in product development and bold
marketing style are world-renowned.
In the automotive sector, there are premium passenger cars under the Mercedes-Benz name as
well as cars and trucks under the brands Jeep?, Chrysler, Dodge, Plymouth and SMART. There
also are commercial trucks, buses and vans bearing the names Mercedes-Benz, Freightliner,
Setra, Sterling and Thomas Built.
In addition to the automotive sector, DailmerChrysler, AG (Griffith) combined many other
Mercedes-Benz and Chrysler Corporation assets. The include:
DaimlerChrysler Aerospace (Dasa) is subdivided into the following divisions: Commercial
Aircraft, Helicopters, Military Aircraft, Space Infrastructure, Satellites, Defense and Civil
Systems, and Aero engines. Dasa is closely involved in the reorientation of the European
aerospace industry.
Commercial Aircraft: the Airbus family continues to grow. The Airbus activities are
consolidated in the largest sector of Dasa, DaimlerChrysler Aerospace Airbus GmbH. Dasa
holds a 37.9% in the European Airbus Consortium, and currently the world’s number two in
passenger aircraft.
Helicopters: global leader with a broad range of products. Dasa owns a 40% percent of the
Franco-German Eurocopter Group, the world’s largest helicopter maker. Military helicopters,
civil helicopters and customer service are the three units within the Eurocopter Group.
Aerospacial GmbH’s wide gamut of products, covering some 90 percent of market needs.
Military Aircraft: Focus on Eurofighter. The Military Aircraft division within Dasa performs the
development, production and maintenance of various military aircraft.
Space Infrastructure: Success with Ariane Laboratories, space stations and major and minor
transport systems for space travel are the core activities of the Space. The Defense and Civil
Systems division provide defense electronics, guided missiles and armament systems. These
include military reconnaissance, marshalling, information and communication systems as well as
radar technology, electronic warfare equipment and air defense systems.
Satellites: The main activities of this division are the development, production and sale of
satellite systems, mini-satellites, instruments, sub-systems and components for a host of
applications, both commercial and scientific. There is international demand for the skills of
DaimlerChrysler Aerospace
Aerospace Engines: MTU Motoren- und Turbinenunion M?nchen GmbH is Germany’s leading
engine and turbine manufacturer, plays an active role in numerous engine programs for civil
transport, military and freight aircraft as well as helicopters.
Along with globalization, the shift towards a service-based society is the most outstanding
characteristic of the structural changes. DaimlerChrysler Services (debis) has been making full
use of the expanding service markets. Also incorporated in this scheme is Chrysler Financial,
one of world’s largest lenders for automobiles and debis transactions.
Cost/Profit of the new Global Corporation
DaimlerChrysler’s Third-Quarter Operating Profit up 24%, Revenues up 15%, Net Income up
14%
Adjusted earnings per share for third quarter up from EUR 1.36 ($ 1.45) to EUR 1.51 ($ 1.61).
Most of this comes from record sales of passenger cars, light trucks and commercial vehicles.
Positive outlook due to strong sales and order backlog also allow for a larger profitability of for
the future.
Sale of debitel and the Dasa merger continue
Adjusted operating profit year-on-year rose 24% to EUR 2.6 ($ 2.7) billion. Third quarter
revenues increased by 15% to EUR 36.2 ($ 38.6) billion, reflecting the company’s stable and
profitable growth across most of its automotive, services and aerospace business units.
For the nine months ended September 30, adjusted net income increased 12% to EUR 4.6 ($ 4.9)
billion on revenues of EUR 108.5 ($115.5) billion, also up 12%. Earnings per share were EUR
4.62 ($4.92). In the same period, operating profit, adjusted for one-time effects, improved 15%
to EUR 7.6 ($ 8.1) billion.
Unadjusted operating profit in the third quarter rose by 60% to EUR 3.3 ($ 3.5) billion, including
EUR 886 ($ 943) million from the Debitel sale to Swisscom.
Outlook for fourth quarter and full year 1999
DaimlerChrysler expects continued strong growth in revenues and profits in the fourth quarter.
For the year as a whole, revenues are expected to increase to at least EUR 146 ($ 155) billion or
by about 11% year-on-year, with profits growing faster than revenues, helped by merger
synergies amounting to EUR 1.3 ($ 1.4) billion.
Record sales and profits for passenger car and light truck
In the third quarter 1999, almost all divisions of DaimlerChrysler reported double-digit revenue
growth. The most significant profit increase came from the Passenger Cars Mercedes-Benz,
SMART division, where operating profit was up 40% to EUR 708 ($ 754) million on revenues of
EUR 9.2 ($ 9.8) billion – up 15% – demonstrating very healthy profits from the Mercedes-Benz
brand.
Sales of Mercedes-Benz passenger cars continued to set records with 242,700 units in the third
quarter, up 7% year-on-year. In the first nine months, 733,300 Mercedes-Benz cars were sold, up
12% over the same period in 1998. Sales of smart totaled 51,300 units in the first nine months.
The Chrysler Passenger Cars and Trucks division reached record revenues of EUR 15.2 ($ 16.1)
billion in the third quarter, up 19% year-on-year on unit sales of 722,400, up 7%. In the same
period, operating profit increased by 11% to EUR 1.0 ($ 1.1) billion.
In the Commercial Vehicles division, third quarter sales also set a new record and were up 11%
to 139,800. Operating profit increased slightly to EUR 303 ($ 322) million.
The Services division also increased its revenues with double-digit growth rates (up 17%).
Operating profit was EUR 1.2 ($ 1.2) billion in the third quarter.
Outlook for DailmerChrysler AG
“This is a historic merger that will change the face of the automotive industry,” said J?rgen E.
Schrempp. “By combining and utilizing each other’s strengths, we will have a pre-eminent
strategic position in the global marketplace for the benefit of our customers. We will be able to
exploit new markets, and we will improve return and value for our shareholders.”
Along with a growing share of the global transportation market, DaimlerChrysler expects to
realize cost savings from combining operations. In 1999, the first year of merged operations,
DaimlerChrysler expects to realize benefits of $1.4 billion (EUR 1.6 billion)
These synergies are expected to be realized, in the medium term, by sharing know-how in
engineering and manufacturing. DaimlerChrysler management expects annual benefits for the
following years to be significantly higher.
Not every area will be consolidated. The safeguarding and nurturing of each brand’s unique
image and position will have highest priority. Car design is an example of a function that will
certainly remain separate. While teams will work together and share best practices, it is
imperative that the company maintains the success and identity of each brand.
DaimlerChrysler’s new stock will be traded around the world as a single class of “registered
ordinary shares,” not as the “depository receipts” that German companies with bearer shares up
to this point have used when their shares have been listed on the New York Stock Exchange.
This action, like the merger itself, represents a historic first: Never before has a German
registered company done this. Among other advantages, it represents a big step in making the
new stock easy to trade — all around the world.